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2 - Foundations of Input–Output Analysis

Published online by Cambridge University Press:  06 January 2022

Ronald E. Miller
University of Pennsylvania
Peter D. Blair
George Mason University
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Chapter 2 introduces Leontief’s conceptual input–output framework and explains how to develop the fundamental mathematical relationships from the interindustry transactions table. The key assumptions associated with the basic Leontief model and implications of those assumptions are recounted and the economic interpretation of the basic framework is explored. The basic framework is illustrated with a highly aggregated model of the US economy. In addition, the “price model” formulation of the input–output framework is introduced to explore the role of prices in input–output models. Appendices to this chapter include a fundamental set of mathematical conditions for input–output models, known as the Hawkins–Simon conditions.

Input-Output Analysis
Foundations and Extensions
, pp. 10 - 62
Publisher: Cambridge University Press
Print publication year: 2022

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