Input-Output Analysis in Economic Systems
Summary
Input–output analysis, pioneered by Wassily Leontief, provides a quantitative framework to map interdependencies between industries by representing the economy as a network of inputs and outputs. At its core lies the input–output table, in which each cell records the value of goods or services supplied by one sector to another. Derived from this is the Leontief inverse matrix, which captures both direct and indirect effects of changes in final demand across the entire economic system. Extensions to multi-regional and global scales enable the study of trade linkages, supply-chain resilience and environmental footprints. In policy settings, input–output models inform fiscal stimulus design, assess the impact of sectoral shocks and evaluate transitions to low-carbon economies. Recent advances incorporate econometric estimation, high-performance computing and stochastic methods to reconcile disparate data sources and improve forecasting reliability. The method’s capacity to quantify distributional outcomes further supports equitable decision-making, while its adaptability ensures relevance from national accounts to global supply-chain analysis.
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Input-Output Analysis in Economic Systems publication trend
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Technical terms
Input–Output Table: A matrix that records the value of goods and services exchanged between economic sectors, serving as the foundation for intersectoral analysis.
Technical Coefficient: The ratio of inputs required from one sector to produce a unit of output in another sector, forming the elements of the input–output table.
Leontief Inverse: The matrix obtained by inverting the identity minus technical coefficients matrix, capturing direct and indirect effects of final demand changes.
Multi-Regional Input-Output (MRIO) Model: An extension of input–output analysis that links regional tables to assess interregional trade and supply-chain interactions.
Social Accounting Matrix (SAM): A comprehensive framework extending input–output tables to include institutional and income flows among households, governments and factors of production.
References
- Interregional and intersectoral interaction of digital economy in China. Frontiers in Environmental Science (2023).
- Policy impact assessment in developing countries using Social Accounting Matrices: The Kenya SAM 2014. Review of Development Economics (2020).
- Balancing and reconciling large multi-regional input–output databases using parallel optimisation and high-performance computing. Journal of Economic Structures (2019).
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