I am currently studying and experimenting the input-output methodology. It is a 1930's method based on national accountings that allows to measure the interindustry flow of good and services.
Currently, I am experimenting it on the french economy. More precisely, I wish to measure the direct and indirect impact of the state-funded renewable energy funding scheme (the state buys renewable energy at a fixed price to producers since it is not currently competitive on the electricity market, as regards to to nuclear electricity production)
I want to measure the direct growth of the industry and the indirect growth of the associated industries that is created by the investment in the said industries due to this funding scheme.
I know how much production from 4 sectors is needed to install 1Gw of renewable electricity production capacity and I know how many Gw are installed each year since 2006.
Now my question aims directly at the input-output table that is provided by the National Institute of Statistics and Economic Studies. It is an extremely serious state-owned institution and I have no doubt that the information (the table) they provide is accurate.
But I have a problem since my calculator ( the R software) returns the information that the table that I must use to execute the calculs is singular. And since the formula that I have to use is the following :
x = [I-A]^-1 . f
... by definition, if this [I-A] matrix is singular, it has no inverse. And that is exactly my problem : my calculator returns a message error that prevents me from get through the calculus : " objet is exactly singular : the determinant of the matrix (the leontiev inverted matrix) is zero on the last line, which means that the inversion calculs cannot be opérated. Any idea of the cause ?
NB : to obtain that matrix, I first created an A matrix of technical coefficients by dividing the original input-output table from INSEE by the total production of each branch. This way, each cell of the A matrix of technical coefficients shows how much of any input is needed in euro for the production of one euro of total output.
Hope someone can direct me toward the answer, best regards.