The Input-Output Approach to Instrument Selection
          
                  John Shea
      
  
, 
            2
      (    
                  11
      
  
)
            Journal of  Business and Economic Statistics
      
            145-155
      
            April
      
            1993
          
                          
      
  
  Abstract
              This article proposes a new method of selecting demand-shift instruments for disaggregated industries. I use prior information from input-output tables to identify industries whose output fluctuations are likely to function as approximately exogenous demand shocks for other industries. After motivating this idea theoretically, I implement the input-output approach using data from the 1977 detailed input-output study. I conduct a systematic instrument search for over 450 U.S. manufacturing industries and find over 200 industries possessing plausible instruments.