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Leontif Model

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Karpa
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82 views5 pages

Leontif Model

Uploaded by

Karpa
Copyright
© © All Rights Reserved
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Leontif’s Input-output Model 5 (xii) ( 15 2 10 20 (xi) aks abn Aude Vee Sle Tok View ip Leontif’s Input-output Model The matrix devised by Leontief is often used to show the effect of a change in production of a final commodity on the demand for inputs. Take, for example, a 10 percent increase in the production of “Agriculture.” With the simple input-output table of our example ‘one can estimate how much additional “Machinery,” and other inputs will be requiréd to increase “Agriculture” production. We may isolate and analyze: (1) the quantity of that production that goes to final consumption or demand (Ci), (2) the quantity that goes to total output (X), and (3) the flows (x,) from that industry to other industries. aks bn bude Vee Sle Tok View dp Leontif’s Input-output Model Domestic Demand Total production Nat Kal +Xa24,..an aks bn bude Vee Sle Tok View ip Leontif’s Input-output Model * In 1941, while a professor at Harvard, Leontief calculated an input-output (I-O) table for the American economy. Input-omtput analysis considers inter-industry relations in an economy Essence lies in the concept of backward and forward linkages. Depicting how the output of one industry goes to another industry where it serves as an input, and thereby makes one industry dependent on another both as customer of output and as supplier of inpi Lets see a simple I-O model for three industries: agriculture, manufacturing, and ansportation. aks bn bude Vike Sle Tok View dp Leontif’s Input-output Model Each row of the input-output matrix reports the monetary value of an Industry's inputs and each column represents the value of an industry's outputs. Suppose there are three industries: “agriculture,” “manufacturing,” “transportation,” Row 1 reports the value of inputs to Industry 1 from Industries 1, 2, and 3. Rows 2 and 3 do the same for those industries, Column 1 reports the value of outputs from Industry 1 to Industries 1, 2, 3, Columns 2 and 3 do the same for the other industries.

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