A two-stage econometric method for the estimation of carbon multipliers with rectangular supply and use tables

The Supply-Use Based Econometric (SUBE) approach was proposed to calculate stochastic input–output multipliers from rectangular supply-use tables under the product technology assumption. However, the resulting total use of direct requirements stimulated by final demand (be they carbon emissions, labor, etc.) may differ from the actual total use of direct requirements. To solve this problem, we propose in this paper a two-stage SUBE approach, which takes as prior the initially estimated SUBE multipliers and obtains a posterior set of two-stage SUBE multipliers by constrained least squares minimization. We illustrate the results with an empirical application for carbon emissions in the Portuguese economy in 2005.