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Input-output economics

Sustainable production and consumption can only be addressed by giving due consideration to economic, social and environmental variables. Policies and measures oriented to support growth and employment must be compatible with long-term sustainability and environmental measures as well as strengthen growth and competitiveness of the European economy.

The analysis of the relationships between economic sectors, micro and macroeconomic variables, and socio-environmental factors is of primary importance to estimate the benefits and costs generated by EU policies. Within this context, Input-Output economics is a field full of potential to investigate impacts generated at different sectorial and geographical levels.

When applied to high sectorial and spatial resolution, Input-Output Economics can be used to investigate the trade relationships between countries and sectors, the changes in production technologies, as well as variation in consumption patterns that such policies may cause.

Within the JRC, Input-Output economics is specifically used to assess the economic, social and environmental effects of European Policies, for instance on industrial competitiveness, growth and jobs, national accounts and input-output tables, environmental regulations (air emissions and pollution, resource efficiency use, etc.), internal market, and globalization (e.g. global supply chains).


Input-Output accounting deals predominantly with the estimation/compilation of supply, use and input-output tables.


The JRC is involved in several projects oriented to develop and improve databases for national, international and global input-output analysis. The core of an input-output database is a set of national supply and use tables and input-output tables complemented with environmental and labour extensions. They provide essential information to support policies in the context of sustainable production and consumption at the European level.


Since 2007, the JRC team collaborates actively with Eurostat through various projects (TIMESUT, 2007-11; TIMESUT2, 2012-14; and TIMESUT3, 2014-16) in the estimation of the EU consolidated Supply, Use and Input-Output Tables from existing national data, both at current and previous year prices. TIMESUT projects are also oriented to provide support to Eurostat in the analysis of the best practices for compilation of missing tables and for compilation of tables in previous year prices.

As a follow-up of the TIMESUT projects of the estimation of EU consolidated Input-Output Tables, the JRC team will collaborate with Eurostat in the estimation of the first official EU Multi-country Supply, Use and Input-Output Tables (2015-17), which will be linked to the OECD’s global input-output database through the project FIGARO (Full International and Global Accounts for Research in Input-Output Analysis).

Besides, the JRC team is expected to provide Eurostat with a statistical reference framework on competitiveness and a set of coherent competitiveness indicators, which should aim to serve the European Commission to measure European competitiveness across countries and/or industries. Moreover, the project shall deliver compilation support to Eurostat in the area of multifactor productivity (e.g. quality adjusted labour input, net fixed capital stock by assets and industry, etc.), which is one aspect of competitiveness. More information: EUROSTAT


EU GTAP Input-Output Database

DG TRADE and DG JRC are presently working together in the so called EU-GTAP Project. The objective of the EU-GTAP project is to ensure that the Commission bases its trade modelling analysis on the most reliable and recent Supply, Use and Input-Output tables as inputs to its modelling tools, mainly the GTAP database. Bearing this in mind, the main outcome of this project is the submission (to GTAP) of a set of Input-Output Tables for the 28 Member States for the year 2010 under the new European System of Accounts (ESA2010) methodology and in compliance with GTAP submission requirements.

Besides, the JRC will investigate the sources of difference in Supply and Use tables for 2010 between the two different European accounting systems (ESA95 and ESA10). The project will also provide fully-fledged matrices of Taxes less Subsidies on Products that may be split into: VAT; Other taxes on products (excises), excluding import tariffs; Import tariffs, depending on data availability; Subsidies on agricultural products; and Other subsidies on products. More information: GTAP


EU funded Framework Projects

CREEA (Compiling and Refining Environmental and Economic Accounts): The JRC is one of the consortium partners of the CREEA project (2011-14) funded under the 7th EU Framework Programme for Research. The project aims to refine and elaborate economic and environmental accounts and show the value added of having such harmonized database via case studies.

The CREEA project delivered a database comprising a set of Multi-country Supply, Use and Input-Output Tables for the 27 EU countries, 16 main trade partners and the Rest of the World as an aggregated region. The time period will be the year 2007 both at current and at constant prices. A review EXIOPOL database (2000) will be also provided. The satellite accounts include:
• Final consumption and post-consumer activities: full life-cycle impact
• Stocks and resource endowments
• Environmental accounts for emissions, resources use, ecological footprint, midpoint indicators (LCA) and external cost valuations

More information: CREAA


WIOD (World Input-Output Database):  The JRC was one of the consortium partners of the WIOD project (2009-2012) funded under the 7th EU Framework Programme for Research. The project was mainly oriented to develop new databases, accounting frameworks and models to support policy makers and societies at large in the analysis of the increasingly pressing trade-offs between socio-economic and environmental objectives.

The World Input-Output database comprises:
• Multi-Country Supply and Use Tables disaggregated by 35 sectors and 59 products
• Multi-Country Input-Output Tables (sector by sector) for 35 sectors
• Socio-economic satellite accounts
• Energy, emissions and resources satellite accounts

The WIOD database is freely available for the 27 EU countries, the 12 main trade partners and the Rest of the World as an aggregated region. The time period is between 1995 and 2009 and tables are available both at current and at constant basic prices. Early updates extended the time series of the Supply, Use and Input-Output Tables to 2011.

More information: WIOD


EXIOPOL (A New Environmental Accounting Framework Using Externality Data and Input-Output Tools for Policy Analysis): The JRC was one of the consortium partners of the EXIOPOL project (2007-11) funded under the 6th EU Framework Programme for Research. Concerning input-output research activities, the EXIOPOL project was mainly oriented to:

• Set up a detailed environmentally extended (EE) Input-Output (I-O) framework, with links to other socio-economic models. This allows for the estimation of environmental impacts and external costs of different economic sector activities, final consumption activities and resource consumption for countries in the EU;
• To apply the results of the EE I-O analysis for the analysis of policy questions of importance.
• The EXIOPOL database presently comprises a set of Multi-Country Supply, Use and Input-Output Tables for 27 EU countries, 16 main trade partners and the Rest of the World as an aggregated region. The time period is the year 2000 at current prices and the sector/product resolution is 129 sector/129 products. The satellite accounts include:
• Final consumption and post-consumer activities: full life-cycle impact
• Stocks and resource endowments
• Environmental accounts for emissions, resources use, ecological footprint, midpoint indicators (LCA) and external cost valuations

More information: EXIOPOL



The JRC is using the accounting tables presented above to perform Input-Output analysis oriented to provide policy support in the socio-economic and environmental areas. Input-Output analysis serves to estimate impacts in output values, emissions, employment, income, and commodity prices derived from variations in final demand quantities and in unitary prices of factor inputs. They rely on accounting principles.


Economic, Environmental and Social effects of globalisation

The JRC is using the databases presented above to perform Input-Output analysis oriented to provide policy support in the socio-economic and environmental areas and particularly, on its relation with global trade.

More information: Economic, Environmental and Social effects of globalisation

Disasters analysis

The JRC quantified the global economic impacts generated by the 2011 Japanese Disasters. By using the World Input-Output Database (WIOD) and a Multiregional Input-Output Model, the cascading effects generated on global economies by the disruption in the supply-production chain of automotive sectors have been quantified both in terms of value added and output reductions. A quantification of the most affected economic sectors and countries are provided. This work has been published in the journal Economic Systems Research (2015).

More information: Global economic impacts from the Japanese disaster

Key sector analysis

This report aims to contribute to the screening phase of identifying the sectors that most contribute to the adjustment capacity of the EU economy, regarding the supply of essential inputs to the rest of the economy. The results were extensively reflected in the Communication COM(2007) 724 final “A single market for 21st Century Europe” and accompanying staff Working Paper SEC(2007) 1517 “Implementing the new methodology for product market and sector monitoring: results of a first sector screening”. The publication of the results was made in: Rueda-Cantuche, JM., Neuwahl, F. and Delgado, L. (2011) “The Adjustment Capacity of the European Economy Examined with an Input-Output Based Key Sector Analysis”, in: R. K. Benson (ed.): Economic Performance, Economic Issues, Problems and Perspectives Series, Nova Science Publishers: New York.

More information: Adjustment capacity of the EU economy



Input-Output modelling improves the reliability of the impact and forecasting results going beyond a mere comparative static analysis (e.g. dynamic econometric input-output models and CGE models).


The JRC, supported by the Austrian Institute of Economic Research (WIFO) and the Joanneum Research, have developed a dynamic econometric input-output model for the EU aiming to support European policies that contributes towards the goal of sustainable production and consumption. The model is called Full Interregional Dynamic Econometric Long-term Input-Output (FIDELIO) model.

The FIDELIO model captures in an integrated way the interactions of consumption, production, labour market, international trade and the environment. FIDELIO can be characterized as Dynamic Econometric Input-Output model and explicitly describes an adjustment path towards a long-run equilibrium. The model admits log-run full employment equilibrium, which will not be reached in the short run, due to institutional rigidities. These rigidities include liquidity constraints for consumers and wage bargaining. Depending on the magnitude of the distance to the long-run equilibrium, the reaction of macroeconomic aggregates to policy shocks can differ substantially. Therefore, no automatic market clearing via the price mechanism in all markets is specified.

FIDELIO describes the inter-linkages between 59 industries as well as the consumption of five household income groups by 47 consumption categories and is closed by endogenizing parts of public expenditure in order to meet public debt targets. The model covers the EU27 and 7 non-EU countries (United States, Brazil, Russia, India, China, Japan, Turkey and one region covering the rest of the world), which are all linked via inter-country and inter-industry trade, so that the geographic spillovers are captured at the disaggregated level, too.

The dynamics of FIDELIO consists of private consumption modelled based on an inter-temporal optimization problem of the choice between durable and nondurable goods; capital stocks and demands for investments are obtained using the dynamic neoclassic theory of optimal capital accumulation, and time is explicitly incorporated in various behavioural equations, e.g., accounting for the effect of technical progress due to total factor productivity growth and factor-biased technical progress. Besides Leontief-type functions, other flexible functional forms are employed: e.g. intermediate and primary inputs demands are modelled using the translog cost approach, while nondurable good allocation is based on the Quadratic Almost Ideal Demand System approach (QAIDS). Using the wage curve literature, wages by labour skill levels are specified as a function of labour productivity, consumer prices and unemployment rates. All the necessary parameters of the behavioural equations of the consumption, production and labour blocks are estimated econometrically from the appropriate time series data.

Supply and Use tables of Eurostat (TIMESUT database), and the WIOD's world input-output tables together with the environmental and socio-economic accounts make the core dataset of FIDELIO. Other databases have been used such as:  National Accounts, as published by Eurostat; EUKLEMS data for factor demand by industries and factor prices; UN Comtrade for import prices;  Odysee database for data on energy efficiency;  EUROSTAT/COICOP data for households consumption of commodities; among others.

FIDELIO incorporates different skill levels of labour input as well as different sources and mechanisms of technological change. These include total factor productivity (TFP) and the factor bias of technical change, both at industry level, and energy efficiency in household energy use for heating, electricity and vehicles. Implementing investment in these technological fields in FIDELIO shows an impact on energy flows and environmental variables as well as on macroeconomic and industry variables (GDP, output prices, real output, employment and others) with a significant level of breakdown by industries, products and countries.

The present version of FIDELIO can be used to investigate both demand-side and supply-side shocks, but, in general, it is more suitable for impact assessment analyses of the demand-driven shocks. To name a few applications, FIDELIO is suitable for economic and environmental assessment of introduction of different market based instruments such as taxes and subsidies, the effects of external/natural shocks on output supply, and the effects of changes in tariffs and transit costs (e.g., due to a country joining a free trade agreement).

The first application of FIDELIO focuses on the impact assessment of one part of the Thematic Strategy on Air Pollution (TSAP) , namely, the analysis of the strategy of reducing air emissions to due installation of more environmentally friendly households' appliances (fireplaces, boilers, and stoves). It will also be used to assess consumption based policy instruments within the FP Project CARBON CAP.

More information: FIDELIO