A new perspective for the calculation of Ghosh-like forward multipliers

Abstract

The tools currently used to identify and measure forward effects in disaggregated multi-sector models are widely considered inadequate. While the multi-sector approach is broadly accepted, the Ghosh classical model (1958), commonly employed in these analyses, has faced substantial criticism for two primary reasons. First, the model fails to accurately represent the technological characteristics of a market economy. Second, it gives rise to conceptual inconsistencies in the relationship between value-added and output levels. To overcome these limitations, we propose a new and straightforward replication method, grounded in standard theory, for identifying and measuring forward effects. Although this approach departs from the Ghosh model, it retains the core principle of examining the dependence of output on value-added.