Dynamics of the input-output system

The original edition of The Structure of American Economy, 1919–1929 did not mention economic dynamics (Leontief, 1941). A fairly complete exposition of dynamic economic theory, in an input-output framework, was presented to the American Economic Association (AEA) by Leontief in 1949, and later included as chapter D in the enlarged version of The Structure of American Economy, 1919–1939 (Leontief, 1951).

Leontief and several of his associates continued to make major advances in input-output analysis, which were brought together in a major publication (see Leontief et al., 1953). In this volume Leontief described open and closed, static, comparative static, and dynamic models. He also summarized the work he had been doing in the development of spatial models.

The basis of any input-output system is a transactions table: a two-way ordering of all interindustry sales and purchases during a given time period (usually a year). To complete the system a column of sales to ultimate users (or final demand) is added on the right-hand side of the transactions table, and a corresponding row, called value added (or payments sectors), is included at the bottom of the table. This is the raw material of an input-output model, from which a number of coefficients are calculated and used for a variety of analytical purposes (for further details at an elementary level, see Miernyk, 1965, pp. 9 and 149). Constructing transactions tables is costly and time-consuming. National tables are assembled by central statistical agencies.