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Resumo Do Modelo de Insumo-Produto PDF
Resumo Do Modelo de Insumo-Produto PDF
Math 547
Research Project
Minju Kim
Introduction
Professor Wassily Leontief started input-output model with a
question, what level of output should each of the n industries
in an economy produce, in order that it will just be sufficient to
satisfy the total demand for that product? Leontief Input-
output analysis which was developed by Professor Wassily
Leontief in the 1930s is a method used to analyze the
relationships between sectors in an economy. These sectors are
interdependent on the other sectors in the economy. In order to
produce something, each sector needs to consume of its own
output and some of output from the other sectors. He developed the models to model economies
using empirical data. He divided U.S. economy into 500 economic sectors and described the
interdependence between sectors with input-output matrices. With input-output model, it became
possible to determine the total output of industries that must be produced to obtain a given
amount for final demand. By using the Leontief Input-output Model, it is possible to find
production levels which will meet the demands of all sectors inside and outside of that economy.
On October 18 in 1973, Wassily Leontief won Nobel Prize in economy for this work in this area.
This analysis has been used extensively in economic production planning and in developing
countries. Also, by looking at the Leontief Input Output Model, it is possible to tell whether an
economy is productive or non-productive.
Let mij: the number of units produced by industry Si to produce one unit of industry Si
Pk: the production level of industry Sk
mijpj: the number of units produced by industry Si and consumed by industry Sj
di: demand from the ith outside industry
Then, total number of units produced by industry Si, pi= p1mi1 + p2mi2 + + pnmin + di
: : : : :
( ) ( ) ( )
( ) ( ) ( )
A=[ ], P= [ ], and d=[ ]
( ) ( ) ( )
Matrix A is called input-output matrix or consumption matrix. A consumption matrix shows the
quantity of inputs needed to produce one unit of a good. The rows of the matrix represent the
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producing sector of the economy. The columns of the matrix represent the consuming sector of
the economy. The entry mij in consumption matrix represent what percent of the total production
value of sector j is spent on products from sector i. d is the demand vector. Demand vector d
represents demand from the non-producing sector of the economy. Vector P represents the total
amount of the product produced.
P = AP + d [ ]=[ ]+[ ]
P = AP + d (I A)P = d P = (I-A)-1d
If consumption matrix A and demand vector d have nonnegative entries, and if consumption
matrix A is economically feasible, then the inverse of the matrix (I-C) exists and the production
vector P has nonnegative entries and has the unique solution for the model. We call matrix A is
productive in this case.
A= [ ].
P = (I A)-1d
IA=[ ]
In 3x3 matrix, B = [ ].
B-1 = [ ]
Since det(I-A)=0.5898*0.6217*0.8081+0.9376*0.8412*0.9743+0.8764*0.9699*0.8950-
0.5898*0.8412*0.8950-0.8764*0.6217*0.9743-0.9376*0.9699*0.8081=0.1157520, there exists
an inverse of matrix (I-A).
(I A)-1 = [ ]
P = (I A)-1d = [ ] [ ]=[ ]
Therefore, the total output of the Agriculture must be $82.40. The total output for the
Manufacturing must be $138.85. The total output for the Services sector is $201.57.
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Invertibility
An n x n matrix C is invertible if (and only if) rref (C) = In
or, equivalently, if Rank(C) = n
[ ]=
[ ] [ ]
[ ] [ ]
3 x 3 matrix (I-A) is invertible since rref (I-A)= I3 and Rank(I-A)= 3. So, invertible matrix of
[ ]. We can check that the sums of each column are less than 1. (The
d > 0 in final demand in equation P = (I A)-1d should result in an increase P > 0 in total
output. Therefore, if the matrix (I A)-1 is not positive, the logic is violated.
Being a positive definite matrix ((I A)-1) assures that the economy can meet any given demand.
When this happens, consumption matrix A and the economy are called productive.
The principal leading minors of a matrix are set of determinants from sub-matrices of a certain
matrix. In the Open Leontief Input-Output Model, they come from (I A). The principal leading
minors start with the determinant of the entry, which is left after every row except the first is
omitted and every column except the first is omitted. The second principal leading minor
excludes every row past the second and every column past the second. Until the determinant of
the entire matrix is taken, this pattern needs to continue.
[ ]
The first principal leading minor: the determinant of a11, or a11. The second principal
continue until the last principal leading minor that is the determinant of the matrix.
If all these principal leading minors are positive, a matrix is invertible and positive definite. Also,
it means that a production vector P satisfies any demand and the economy is productive.
can check that the sums of the columns are less than 1. It means that the industries require few
inputs to make output and most output will be sent to satisfy an outside demand.
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I A= [ ]. The first principal leading minor is 0.9 and it is positive. The second
References
1) The Leontief Input-Output Model. Web. Retrieved from
http://www.personal.psu.edu/kes32/MichiganClasses/math217/Worksheets2/leontief.pdf
2) Kallem, Nicholas. Input-Output Analysis with Leontief Models. Web. Retrieved from
http://home2.fvcc.edu/~dhicketh/LinearAlgebra/studentprojects/spring2006/nicholaskalle
m/Leontief%20project.htm
3) Chiang, Alpha. Leontief Input-Output Models. Web. Retrieved from
http://www.docstoc.com/docs/129503308/From-Chapter-5-Alpha-Chiang-Fundamental-
Methods-of-Mathematical
4) Duchin, Faye. Rensselaer Polytechnic Institute. Department of Economics. Web.
Retrieved from http://www.economics.rpi.edu/workingpapers/rpi0610.pdf