Handbook of Input–Output Analysis
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Handbook of Input–Output Analysis

Edited by Thijs ten Raa

In this authoritative Handbook, leading experts from international statistical offices and universities explain in detail the treatment and role of input-output statistics in the System of National Accounts. Furthermore, they address the derivation of input-output coefficients for the purpose of economic and environmental modeling, the building of applied general equilibrium models, the use of these models for efficiency analysis, and the extensions to stochastic and dynamic input-output analysis. As well as revealing and exploring the theoretical foundations, the Handbook also acts as a useful guide for practitioners.
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Chapter 10: General equilibrium analysis

Kurt Kratena

Abstract

The supply-use system of production is extended to a social accounting matrix by and enriched with alternative model specifications in the blocks of final demand, production, and factor markets. Domestic, import and export prices are accommodated and different composite prices face industries, households, government and the Rest of the World, accounting for taxes and other margins. These price equations second the quantity equations. Alternative macroeconomic closure rules enable the determination of equilibrium values of output and prices, either by Leontief inversion or iteration. The demand function for private consumption nests different forms, including Cobb-Douglas, translog and the Almost Ideal Demand System. Production and trade are also generalized, using constant elasticity of substitution or translog functions, including for labor and capital demand and supply. Household consumption can be extended to a dynamic framework, to explain savings. The models, from static input-output to full-fledged computable general equilibrium are presented explicitly, in a unified manner.

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