Application of Financial Social Accounting Matrix (FSAM) for Analyzing Real-Financial Linkages of Iranian Economy

Abstract

Prevailing views in Iran suggest that financial sector mobilizes more resource to services than to the commodity producing sectors. On account of double counting in intermediate inputs, the conventional multipliers derived from the Financial Social Accounting Matrix (FSAM) cannot solve this problem. As an alternative to conventional multipliers, FSAM GDP multipliers which indicate the growth performance of financial system of economy are proposed. Using a newly constructed 2016 FSAM for Iran, both conventional and GDP multipliers of Real Social Accounting Matrix (RSAM) and FSAM have been worked out. The overall findings are as follows: First- the average conventional and GDP multipliers in FSAM are larger than their corresponding figures in RSAM. Second- in RSAM, the average conventional multipliers of commodity producing sectors are larger than services whereas the GDP multipliers give the opposite pictures which support the prevailing opinions in Iran. Third- With respect to conventional and GDP multipliers at the sectoral level, the results show that in the case of conventional multipliers, 8 out of 10 top highest multipliers are commodity producing sectors whereas GDP multipliers give exactly the opposite trend which vindicates the resource mobilization of financial sector towards the service sectors.