Developments in Major Fields of Economics
Edited by Gilbert Faccarello and Heinz D. Kurz
Chapter 23: Input–output analysis
Input–output analysis is a technique developed for the study of interdependencies between sectors or industries of an economy. It is based on a system of linear equations which describe the existing relations between the inputs (or means of production) and outputs (or products) of all sectors of an economy. The framework has proved very successful in applied economic research. Nowadays, input–output economics covers a very broad area of research. Good overviews of the literature can be found in the collection of articles edited by Kurz et al. (1998), in Miller and Blair’s (2009) textbook, and in Ten Raa (2005). The International Input–Output Association (IIOA), founded in 1988, is the main network of economists working in the field (www.iioa.org). It publishes the journal Economic Systems Research. It is customary to trace the origins of input–output analysis to the work of Nobel laureate Wassily Leontief (1905–1999). Leontief wrote a PhD dissertation at the University of Berlin under the supervision of Ladislaus von Bortkiewicz (1868–1931). In 1928 he published part of his work (in German) as an article with the title “The economy as a circular process”. After moving to Harvard University he further elaborated his model, and started to collect the data for the first input–output table of the United States economy. This led to the 1936 article “Quantitative input–output relations in the economic system of the United States” and then to his 1941 book The Structure of American Economy, 1919–1939. An Empirical Application of Equilibrium Analysis.
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