Quantitative and Qualitative Approaches
Elgar original reference
Edited by Larry Dwyer, Alison Gill and Neelu Seetaram
12 Input–output and SAM models Clemente Polo and Elisabeth Valle NATURE OF THE TECHNIQUE AND ITS EVOLUTION Input–output (IO) and social accounting matrix (SAM) models are tools that economists have used for many decades to measure sectoral interdependencies, compare the economic structure of economies, quantify production impacts, measure structural and productivity changes, study the effects of redistribution policies, calculate the energy content of commodities, estimate CO2 emissions, etc. The IO model is a simple linear model first proposed by Leontief (1937) to determine production quantities and prices in a set up where commodities are produced with commodities. It was as Leontief himself put it ‘an attempt to apply the economic theory of general equilibrium – or rather, general interdependence – in an empirical study of the interrelationships between different parts of the economy . . .’. In Leontief ’s model quantities of different commodities and prices were treated as variables and ‘the technical and natural conditions of production and the tastes of consumers’ as data. The applied nature of his endeavour and the lack of detailed technological investigations to cover ‘the entire field of agricultural, mineral and industrial production’ led Leontief to specify ‘the technical set up of each industry by as many homogeneous linear equations as there are separate cost factors involved’.1 Following Walras, Leontief termed ‘coefficients of production’ the parameters included in those linear equations and assigned them numerical values employing a statistical table constructed for the United States that included detailed information on ‘quantitative input and output relations’ for...
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