CONSTRUCTING A BI-REGIONAL SOCIAL ACCOUNTING
MATRIX FOR QUEBEC AND THE REST-OF-CANADA
by
David Bahan, Laurence Bargaud, Danielle Bilodeau
and Camille Courchesne
Institut de la Statistique du Québec
Ministère des Finances du Québec1
to be presented at the
Fourteenth International Conference on Input-Output Techniques
October 10-15, 2002, Montréal, Canada
1
The General Equilibrium Model is the property of the Ministry of Finance of Québec (MFQ).
However, opinions expressed in this paper are those of the authors, who are solely
responsible for them.
PREFACE
Because they are capable of tracking complex economic interactions, as well as
their effects on agents' behavior, general equilibrium models are extremely
powerful tools for the analysis of economic and fiscal policy.
In the spring of 2000, the Ministry of Finance of Québec decided to acquire such
an analytical tool. It mandated the Centre de Recherche en Économie et Finance
Appliquées (CRÉFA) at Laval University to develop a general equilibrium model
adapted to the specific features of the Québec economy. The Institut de la
Statistique du Québec (ISQ) contributed to the success of the project by agreeing
to participate actively in developing the model, and assumed the task of
constructing the underlying social accounting matrix.
To ensure that the model responds to the needs of the Ministry of Finance of
Québec, the CRÉFA team, led by Bernard Decaluwé, André Lemelin and
Véronique Robichaud, and the ISQ team, under Camille Courchesne, David
Bahan and Danielle Bilodeau, worked in cooperation with Ministry of Finance
staff, especially Brian Girard, Éric Genest-Laplante and Xavier Brosseau.
In the hands of Ministry of Finance of Québec, the computable general
equilibrium model is a highly efficient tool to better understand the complex
implications of economic and fiscal policy, with the aim of better decision-making.
This analysis is based on the general equilibrium model of the Ministry of
Finance of Québec and on the social accounting matrix constructed by the ISQ.
However, the authors are solely responsible for the interpretation of these data.
Constructing a Bi-Regional Social Accounting Matrix for Quebec
and the Rest-of-Canada
Abstract
The model is based on a social accounting matrix (SAM) which describes the
structure of the Québec-Canada economic system for reference year 1996. The
SAM was constructed so as to be consistent, in the first place, with the principal
aggregates of the national accounts, and, secondly, with Statistics Canada's
input-output tables, while satisfying the usual internal consistency rules.
The model, and consequently the underlying SAM is very detailed, and as
detailed for the Rest-of-Canada as for Quebec, save for the various levels of
government. The industry and goods classifications are close to Statistics
Canada's M-level input-output aggregation : 56 industries, 121 commodities, and
48 categories of personal consumption expenditure. Investment is detailed
between 13 different categories. There are 150 household types in Québec and
155 in the Rest-of-Canada, defined by household composition, income level and
age group. Factor demand distinguishes 11 types of labour and two types of
capital (corporations and unincorporated business).
This paper will describe the general structure of the bi-regional SAM, with
special emphasis on the supra-regional accounts. The process of constructing
the SAM will then be discussed : data sources, methods of disaggregation,
adjustment procedures, balancing, etc. Finally, the main difficulties encountered
in the process will be commented upon.
TABLE OF CONTENTS
1. STRUCTURE OF THE SOCIAL ACCOUNTING MATRIX
2. DISAGGREGATION OF ACCOUNTS
3. DATA SOURCES
4. CONSTRUCTION OF THE SOCIAL ACCOUNTING MATRIX
1. STRUCTURE OF THE SOCIAL ACCOUNTING MATRIX
Bi-regional SAM
Overall structure
Québec
Rest of Canada
Rest of the World
Québec
Rest of Canada
Rest of the World
Domestic transactions
Exports from Québec to
the Rest of Canada
International exports
Imports from Québec from
the Rest of Canada
Domestic transactions
International exports
International imports
International imports
2.
Bi-regional SAM
Domestic transactions matrix for Québec
QUÉBEC
Factors
Agents
Products
Remuneration
of factors
Factors
Agents
Industries
Income
Transfers
QUÉBEC
Domestic
production
Industries
Products
Final
consumption
Intermediate
consumption
3.
Bi-regional SAM
Reflecting the integration of financial markets
Supra-regional accounts
Québec
Rest of Canada
Québec
Rest of Canada
Accumulation
Supraregional
accounts
Rest of the
world
Accumulation
Rest of the world
Internal
transactions
Exports of Québec
to the Rest of
Canada
Investment in
Québec
International
exports
Imports of Québec
from the Rest of
Canada
Internal
transactions
Investment in the
Rest of Canada
International
exports
Savings in Québec
Savings in the Rest
of Canada
International
imports
International
imports
4.
Bi-regional SAM
The Federal government
Québec
Rest of
Canada
Fed.Gov.
expenditures In
Québec
Québec
Fed.Gov in
Québec
Fed.Gov.
revenues in
Québec
Fed. Gov
expenditures In
the RoC
Rest of Canada
Surplus (+) or
deficit (-)
Accumulation
Suparegional
Supra-regional
Consolidated
Federal
government
Fed. Gov. in
Québec
Consolidated
Federal
government
Surplus (+) or
deficit (-) in
Québec
Fed. Gov.
revenues In
the RoC
5.
2. DISAGGREGATION OF ACCOUNTS
Disaggregation of accounts

Households
— 150 categories for Québec (155 for the RoC)
• 7 types of households
• 6 income classes
• 4 age groups

Goods and services
— 121 goods and services
• Modified Statistics Canada level M
• Statistics Canada level W for goods and
services with special taxation regime
6.
Disaggregation of accounts

Production
— 56 industries
• Modified Statistics Canada level M
• 3 levels of government
• Separate treatment of the main
government intervention sectors (public
health and education services)
7.
Disaggregation of accounts

Québec government
—
—
—
—
—

6 transfer programs to persons
8 types of indirect taxes
3 types of social contributions
Personal income tax
Corporate income tax
Federal government
—
—
—
—
—
7 transfer programs to persons
7 types of indirect taxes
3 types of social contributions
Personal income tax
Corporate income tax
8.
Disaggregation of accounts

Supra-regional accounts
— Accumulation
— Consolidated federal government
— Investment income
— Rest of the World
9.
3. DATA SOURCES
Data sources

National and Provincial economic accounts

Input-Output tables for Québec and
Canada

Database of the Social policy simulation
model (SPSD/M)

Other sources
— Administrative data files from the Ministère du revenu du
Québec
— Special compilation from the Commission de la santé et
sécurité au travail
10.
4. CONSTRUCTION OF THE SOCIAL ACCOUNTING MATRIX
Construction of the SAM

Difficulties encountered
— Divergence of concepts between surveys
and the National account system
— Confidentiality of the canadian inputoutput tables
— Non standard flows
11.
Future development

Updating the SAM for 1997
— Revised data from the national and provincial
economic accounts.
— 1997 Input-Output tables

Extensions
— Using the NAICS classification for industries
— Using the SOC91 for workers
— Adding the disctinction between minimum
wage and non-minimum wage workers
12.