|**Tool name:**|**Social Accounting Matrices**|
|---|---|
|**What is it?**|A SAM is a technique related to national income accounting that provides a conceptual basis for<br>examining growth and distributional issues within a single analytical framework. It can be seen as a<br>tool for the organization of information in a single matrix of the interaction between production,<br>income, consumption, and capital accumulation.|
|**What can it be used for?**|SAMs can be used for some simple policy simulations.|
|**What does it tell you?**|SAMs can be applied to the analysis of the interrelationships between structural features of an<br>economy and the distribution of income and expenditure among household groups.|
|**Complementary tools:**|SAMS would complement and be complemented by the use of household surveys to map impacts into<br>distributional changes. Stakeholder analysis can be useful in identifying different groups of interest.|
|**Key elements:**|A typical SAM contains entries for productive activities, commodities, factors, institutions, the capital<br>account, and the “rest of the world.” An activity produces (and receives income from) commodities,<br>buys commodities as production inputs, and pays wages to labor, rents to capital, and taxes to the<br>government. Factor income accrues to households as owners of the factors. The SAM can be<br>constructed to distinguish household groups by, for example, sources of income. SAM techniques<br>select some accounts as exogenous and leave the remaining accounts endogenous. In part, this<br>selection can be made on a sound theoretical basis, but it is often arbitrary. For example, if the SAM<br>contains an account for agricultural production and one for transportation, an experiment can be run by<br>imposing some exogenous change (a “shock”) to agriculture, while leaving the transport sector fixed or<br>while allowing the transport sector to adjust endogenously as a result of the shock.|
|**Data/information:**|The data sources for a SAM come from input-output tables, national income statistics, and a household<br>survey with a labor module.|
|**Time:**<br>**nts**|About three months for a moderately detailed SAM.|
|**Skills:**<br>**ireme**|Working with household data sets, strong knowledge of national accounts, and use of Excel and,<br>maybe, the General Algebraic Modeling System (for using dedicated software).|
|**Supporting**<br>**software:**<br>**Requ**|Excel and dedicated software based on the General Algebraic Modeling System, and Stata, SAS, or<br>Statistical Package for the Social Sciences for workingwith household data sets.|
|**Financial cost:**|US$25,000 when the data are available. This does not include the cost of developing a new household<br>survey.|
|**Limitations:**|SAM models have at least two major drawbacks. First, prices are fixed and do not adjust to reflect<br>changes in, say, real activity. As a result, supply is either perfectly elastic (if chosen to be endogenous)<br>and entirely demand driven, or perfectly inelastic, that is, supply is constant. Second, the results of the<br>simulations vary greatly depending on the assumptions made about which accounts are exogenous and<br>which accounts are endogenous.|
||�<br>For an overview of the technique, see Round (2003).<br>�<br>Pyatt and Round (1985).|
|**References and**<br>**applications:**|<br>�<br>Powell and Round (2000).<br>�<br>Reinert and Roland-Holst (1997).<br>�<br>Sadoulet and de Janvry (1995).<br>�<br>Tarp,Roland-Holst,and Rand(2002).|

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