Validation problems and technological change in an input‐output model

The problems of validation of an input‐output model for forecasting the effects of clothing imports on the textile and other industries in the Australian economy are described. These relate to incomplete data requiring estimators to complete a fundamental matrix and allowance for technological change from one previous time period to another. Although reasonable reconciliation was achieved between computed results and industry observations and data over the most recent historical periods for which data is available, the use of the method for forecasting requires allowance to be made for the inclusion of forecasted technological changes via endogenous variables or other means. The method described for the Australian study throws light on some important economic issues which required qualification during the period used for validation. It is operated on a desk top computer.