Social Accounting Matrix

Social Accounting Matrix

Social Accounting Matrix ('SAM'), a model demonstrating the processes of economic growth, based on input-output and regression analysis, constructed by economists at Cambridge. The (British) National Economic Development Council hopes to use it. The purpose is to assess the ability of the economy to reach stated 'targets' (e.g. 4 per cent annual rate of economic growth), assuming a given rate of expansion in the labour force, personal and business expenditure habits, etc., and to foresee where shortages and 'bottlenecks' are likely to occur. The solutions are to be calculated by high-speed computers.

If the calculations of such growth models suggest that the 'bottlenecks' will be numerous or severe or that the targets cannot be reached, the conclusion is either that the original targets were unattainable or that the model is defective. They also require subjective judgment or intuition in selecting the information to be used, and the results are therefore to some extent not wholly objective or scientific'.

A general limitation or weakness of growth models, which are being used in Britain and America, is that the accuracy of the solutions they indicate depends on the quality of the information fed into them. More generally, they are still in their infancy and have not been tested sufficiently to warrant the belief that they can allow for rapid and unforeseen changes in demand (tastes, etc.) and supply (technology) and the resulting alterations in prices, costs and values. II

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