2.6 - 2.6 The Leontief Input-Output Model This is a basic...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2.6 The Leontief Input-Output Model This is a basic model for studying the economies of coun- tries, or provinces, or cities, or ... Assumptions: (i) One part of economy is divided into n sectors of producers that produce goods or services: production vector vectorx R n is the annual output of each sector (ii) Another part of economy is consumers that consume goods and services from the others (and dont produce anything): this is the open sector, and final demand vector vector d R n is the value of goods and services demanded by these nonproductive sectors (e.g., consumer demand, government consumption, exports, surplus production) (iii) Producers of goods and services themselves create an additional demand for goods and services as inputs for their production (that is, they also consume goods and services). This is the intermediate demand For an equilibrium , total produced equals total consumed, that is, vectorx = ( ) + vector d amount produced = intermediate demand + final demand 1 Measuring all inputs and outputs in currency (say, mil- lions of dollars), there is a unit currency vector R n giving input needed per unit of output for each sector. Therefore, there is a consumption matrix C = bracketleftBig vector c 1 | | vector c n bracketrightBig such that intermediate demand = x 1 vector c 1 + x 2 vector...
View Full Document

Page1 / 7

2.6 - 2.6 The Leontief Input-Output Model This is a basic...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online