On the Euro method

This paper critically examines the Euro method usage for the purposes of updating supply and use tables (SUTs) and/or input–output tables. Its known restricted applicability to only unnecessarily aggregated and symmetric SUTs (and not their underlying rectangular versions) is already an issue of concern. However, by studying analytically the nature of Euro's adjustments of the SUT elements and empirically assessing some of its underlying assumptions, including newly revealed ones, it is concluded that the Euro method is a largely ad hoc updating procedure. Its recently claimed superiority over the generalized RAS approach (GRAS, or SUT-RAS) in the absence of industry output is challenged. It is shown that applying the standard GRAS with exogenously given estimates of industry outputs under such restricted data-availability environment still outperforms the Euro method.