Abstract
By the input–output technique the structure of interdependence can be analysed. Existing applied general equilibrium models have often retained the description of the economic productions system in terms of mutually interrelated, simultaneous flows of commodities, technically described in a Leontief input–output model. The purpose of this chapter is to present the input–output model, and the technique used for calculation with the help of a numerical example. However, it is important to remember that input–output analysis is a question of the balancing of supply (output) and demand in terms of technical input–output relationships, representing interindustry dependence, rather than a description of a Walrasian type of market equilibrium.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
For a detailed analysis, see Thijs ten Raa (2005).
- 2.
The foundation for a Swedish applied input–output model, was undertaken by Höglund and Werin (1964).
- 3.
Quesnay privately printed on a press in the palace of Versailles three versions (editions) of a short manuscript. For the definitive text of all three versions, see the work of Kuczynski and Meek (1972). See also Vaggi (1987).
- 4.
Following Koopmans (1951) we may use the term basic activity for any activity a ij (different from zero). There is a one-to-one correspondence between basic activities and sectors in the stipulated economy.
- 5.
According to Chenery and Clark (1959) the proportionality assumption is less valid the greater the degree of aggregation, and the additivity assumption is more valid the larger the aggregates.
- 6.
Matrix inversion is demonstrated in Chiang and Wainwright (2005) on pages 100–102. With more than two sectors these calculations will be complicated. A computer program for matrix inversion is recommended.
- 7.
Exports are included in the final demand.
References
Chenery H, Clark PG (1959) Interindustry economics. Wiley, New York
Chiang AC, Wainwright K (2005) Fundamental methods of mathematical economics, 4th edn. McGraw-Hill/Irwin, Boston
Hawkins D, Simon HA (1949) Note: some conditions of macroeconomic stability. Econometrica 17:245–248, 3–7, July–Oct
Höglund B, Werin L (1964) The production system of the Swedish economy: an input–output study, vol IV, Stockholm economic studies, new series. Almqvist & Wiksell, Stockholm
Koopmans TC (1951) Analysis of production as an efficient combination of activities. In: Koopmans TC (ed) Activity analysis of production and allocation. Wiley, New York
Leontief W (1951) The structure of American economy 1919–1039, Second edition enlargedth edn. IASP, New York
Quesnay F (1758) Quesnay’s Tableau Économique, edited with new material, translations and notes by Kuczynski M, Meek RL (1972), Macmillan, London
ten Raa T (2005) The economics of input–output analysis. Cambridge University Press, Cambridge
Vaggi G (1987) The economics of François Quesnay. Duke University Press, Durham
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Norén, R. (2013). The Input–Output Model: A Study of the Interindustry Structure. In: Equilibrium Models in an Applied Framework. Lecture Notes in Economics and Mathematical Systems, vol 667. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-34994-2_1
Download citation
DOI: https://doi.org/10.1007/978-3-642-34994-2_1
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-34993-5
Online ISBN: 978-3-642-34994-2
eBook Packages: Business and EconomicsEconomics and Finance (R0)