Input Output Model
should
Induction It deals with what level ofoutput
produce in
n Industries
in an economy
each of the
be sufficient to satisfy the
order that it will just
for that product input
as
total demand
Assumption commodity
one homogenous
1 Each industry produces only For
2 Each industry uses a L dtnptrtioi.ea.it
the production of its output
is subject to constant
3 Production in every industry
return to scale
sufficient to meet the input requirement of
Just final demand i e
the n industries as well as the
its output level x mustsatisfy
I of the open sector
the
following equation
X AnX An X t A X t
t an Xn t d
where d denotes the final demand for its
output
the
and a j represents the input demand from
Xj levels
the same token the output
5th industry By
the equations
of the other industries should satisfy
I
X2 92 X 922 24 A X t t dinXn t d 2
t g n Xn t dz
Xz 9X 92 2t g Xt
1 1 I 1 I dn
1
Gnxn t
Xn Anix Anax t Anat
Xj to the left of the equal signs and leaving only
the exogenously determind final demands dj on the
industries by the following system of
a
the n
linear equations
An X ndi 4
Xi g X 9 x 9 x
92nXn dz
X2 921 1 922 2 G Xp
damn dz
Xz 93 X 92 2 933 3
I AnnXu
d n
Xn any any any
common from
all equation
taking Xj
dinXn d
C an x ay ay
GanXn dz
92 X 1 922 2 923 3
93n Xn do
93 X g X
92 2
I annul du
and
and and
In matrix notation this may be written as
1 911 912 913 din X
as an c ans
Hiiiii g 411
Al is called
Alte I
I A X d Leontief matrix
Conclusion
A so
As long as I A is mgr i e
it inverse CI Ast and
we shall be able to find
solution of the system from
obtain the unique
the equation
X CI AI'd
condition is that all
known as Hawkins Simon
matrix Eal be
f
the
principalminasoftheLeontief
positive
Important points
output model
Input
Dynamic version
staticversion
Fexogenous
openidso
close dog
endogenous 1
I solution
No unique exist
solution
the concept
Hopefully you get
Thank
you
Naveen Johar of
