Analytical and Empirical Comparison of Policy-Relevant Key Sector Measures

We consider the 10 most salient key sector measures (linkages) and identify groups of the most similar indicators on both analytical and empirical grounds. We derive new closed-form formulas for the generalized complete and partial hypothetical extraction linkages and add the up-till-now-undefined forward counterpart of the net backward linkage. The analytical relations and some stylized facts enable us to formulate hypotheses about the direction and strength of the relationships between various linkages. To study policy-relevant measures, our empirical tests are based on income (GDP) linkages, CO₂ emission linkages and employment linkages for 34 industries and 33 countries. The data show that the information on the 10 key sector measures may be summarized by three to at most four measures.