EXPLAINING THE CHANGES IN ALPS BY IDENTIFYING ALPS-IMPORTANT COEFFICIENTS:AN EMPIRICAL APPLICATION OF CHINA

This paper establishes the relation between APLs and direct input coefficients through Sherman-Morrison formulation.On such a basis,elasticity matrix can be calculated for each element of the APLs matrix,which measures the percentage change in the APLs-matrix element brought by one percentage change in every direct input coefficient.Hence,the percentage change in each APLs-matrix element caused by the real percentage change in each coefficient with other coefficients fixed can be drawn,from which it is easily to find out the APLs-important coefficients and is useful to explain the reason for change in the matrix.The empirical application studies the Chinese economy.What's more,the method is applied under different level of aggregation.The comparison between the APLs matrix of 1997 and 2002 allows the authors to visualize the elements that change dramatically.Then the methodology above is applied to explain the change from the perspective of direct input coefficients and find out the important coefficients to the Chinese APLs matrix.