Macro-integration with inequality constraints: an application to the integration of transport and trade statistics

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Abstract

Macro-integration is the process of combining data from several sources at an aggregate level. We review a Bayesian approach to macro-integration with special emphasis on the inclusion of inequality constraints. In particular, an approximate method of dealing with inequality constraints within the linear macro-integration framework is proposed. This method is based on a normal approximation to the truncated multivariate normal distribution. The framework is then applied to the integration of international trade statistics and transport statistics. By combining these data sources, transit flows can be derived as differences between specific transport and trade flows. Two methods of imposing the inequality restrictions that transit flows must be non-negative are compared. Moreover, the figures are improved by imposing the equality constraints that aggregates of incoming and outgoing transit flows must be equal.

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