Industry Accounts - Input Output Analysis

This paper provides new benchmark estimates of industry-level price differentials between Japan and the U.S. for 2011 based on a bilateral price accounting model anchored to the Japan-US input-output tables. We apply the model to translate available demand-side data on purchaser’s price PPPs for final uses (e.g. the Eurostat-OECD PPPs) and intermediate uses (e.g. the METI survey) to unmeasured producer’s price PPPs for industry output. These PPPs allow us to produce price level indexes at the industry level, which we use to assess price competitiveness between Japan and the U.S. Under the nominal exchange rate of 110.6 yen per dollar as of the beginning of July 2018, we estimate that producers in Japan have a pricing advantage in 66 of 106 industries in the manufacturing sector, and in 24 of 50 industries in the service sector. We conclude that price competitiveness of Japanese service industries has considerably improved in the more recent time period. However, Japanese producers have a significant price disadvantage in comparison to their U.S. counterparts in electricity and gas supply, and most of the agricultural producing industries.

This paper presents proof-of-concept trade-in-value added (TiVA) statistics estimated from extended supply-use tables for the United States that account for firm heterogeneity. The tables used to estimate the TiVA statistics extend recently-introduced supply-use tables for the United States by disaggregating the components of supply and use by multinational and other firms. Recent research has shown both the advantages of measuring trade on a value added basis when analyzing bilateral trade flows and the dominance of multinational enterprises in U.S. trade in goods and services. Our TiVA statistics for the United States include measures based on traditional supply-use presentations as well as statistics that reflect firm-level heterogeneity for the year 2011. The comparative analysis of the two sets of statistics allows us to understand better how firms within industries engage in global value chains and if the incorporation of firm heterogeneity provides a more accurate measurement of TiVA. We find that domestic value added as a share of the value of exports is similar within large industry groups. However, there is much more variation in the value added share of exports when firm type is accounted for. Also, the additional granularity shows the share of this value added that comes directly from the producing industry varies much more across industries.