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Leontif Input-Output Model in An Economic System

The document discusses the Leontief input-output model, which represents an economic system using linear equations. It explains that the model uses matrix algebra to solve the sets of linear equations and find the production vector given the demand vector. The document also describes the open Leontief model, which accounts for both internal demands between industries as well as external demands from outside the system, such as government agencies. The goal is to find the production levels needed to satisfy total internal and external demands.

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15 views

Leontif Input-Output Model in An Economic System

The document discusses the Leontief input-output model, which represents an economic system using linear equations. It explains that the model uses matrix algebra to solve the sets of linear equations and find the production vector given the demand vector. The document also describes the open Leontief model, which accounts for both internal demands between industries as well as external demands from outside the system, such as government agencies. The goal is to find the production levels needed to satisfy total internal and external demands.

Uploaded by

hanjenzei
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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LEONTIF INPUT-OUTPUT

MODEL IN AN ECONOMIC
SYSTEM

INTRODUCTION

The Leontief model represents the economy as a
system of linear equations. To find X (production
vector) in terms of D (demand vector), we will solve
sets of linear equations. Such equations are naturally
represented using the formalism of matrices and
vectors. We will solve linear equations with matrix
algebra. In matrix algebra, we will use matrix
inverses and matrix multiplication. Also, to find a
solution, we will use Gaussian-elimination technique.
To decide if the economy is productive, we will use
the Hawkins-Simons conditions.


The Open Leontief Model
There is a Closed Leontief Model where no goods
leave or enter the economy. However, in real
economic world, it does not happen very often.
Normally, a certain economy has outside demand
from like government agencies. Therefore, we will
use the Open Leontief Model. In Open Leontief
Model, there are industries in an economy. Each
industry has a demand for products from other
industries (internal demand). Also, there are external
demands from outside. We will find a production
level for the industries that will satisfy both internal
and external demands.

http://www.math.ksu.edu/~gerald/leontief.pdf
http://mathfaculty.fullerton.edu/mathews/n2003/LeontiefModelMod.html
http://barnyard.syr.edu/mat183/l32/
http://home2.fvcc.edu/~dhicketh/LinearAlgebra/studentprojects/spring2006/nicholaskallem/Le
ontief%20project.htm
http://www.unc.edu/~marzuola/Math547_S13/Math547_S13_Projects/J_Zu_Section001_Input
Output.pdf
http://www.unc.edu/~marzuola/Math547_S13/Math547_S13_Projects/M_Kim_Section001_Leo
ntief_IO_Model.pdf
http://www.personal.psu.edu/ssb168/documents/teaching/spring2011/Input-
Output%20Models.pdf

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