Abstract
ABSTRACT It is standard practice to treat input-output (I-O) technical coefficients as fixed. The coefficients are fixed when σ , the elasticity of substitution, is zero, a restriction mostly not supported by 25 years of I-O tables for Australia. We offer a simple way of allowing for variable coefficients with a CES approach. Finally, using various values of σ in CGE simulations establishes that taking coefficients as fixed has misleading economic implications.
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