Errors of Projection in Input-Output Model and its Correction: An Experiment with Indian Data

The projeclion of sectoral outputs of an economy is carried on the basis of the Input-Output coefficient matrix of the base period From the different empirical tests made it appears that errors are likely to urise in the projection of economic variables through Input-Output Model. This is so more in developing countries like India because of the rapid economic change taking place in these countries. It is, therefore, necessary to correct the projected values to arrive at more reliable estimate. Various altempts have been made to find out methods for estimation of the size of the error in Input-Output model. Of these attempts, Theil's contribution is worth mentioning. The present paper will present certain modification of Theil's model and experiment with this modified model is done with Indian data.