A Study on the Economic Implications of the Output Requirements Matrix for Output

Abstract

Most recently, the authors (Gim and Kim, 2009) showed the following research outcomes concerned with the Input-Output (IO) model and table pioneeringly developed by W. Leontief in the early 1930s: (1) the general relation and the complemented general relation between two different input requirements for final demand and total output, (2) the entire decomposition by factors in output and input requirements matrices, and (3) the consecutive connection and overestimation problems in the inter-industry model.BR Moreover, we found out that there is no consecutive connection between the Leontief inverse matrix CSUPf/SUP and the total output x and that there are some limits to computing the impact effects of the initial change in output. Finally, we developed a new??Output-Output(OO) model??and compiled a new??Output-Output table??to solve the problems and limits in the IO model together through the output requirements matrix for output C?.BR On the basis of the latest research findings, the specific objectives of this paper can be summarized as follows. (1) We closely examine into the characters and characteristics of the OO model used as an alternative to the IO model. (2) We test the consecutive connection problem, in the interpretation of inter-sectoral interdependence, in the OO model between the output requirements matrix C?, the total output x, and the final demand f. (3) We derive the varied economic interpretations and implications from the inverse matrix C?. Therefore, we truly understand that the IO and OO models are not completely separate or independent even though they differ essentially on the impact (the initial change on final demand vs. total output).