Leontief Model Research Articles

ХАРАКТЕРИСТИКА, МЕСТО И РОЛЬ АВТОМОБИЛЬНОЙ ПРОМЫШЛЕННОСТИ В СОВРЕМЕННОЙ СТРУКТУРЕ МАШИНОСТРОЕНИЯ ИРАНА

The article is devoted to the study of the role of automotive industry in modern Iran industry: The features of the evolution of the automotive industry in the country are analyzed, the quantitative assessment of the significance of the automotive industry for the economy is made on the basis of the Leontief model (costs-output), the main trends in the development of the automobile industry, as well as the state’s goals and policy in the development of the automobile industry for the period until 2025 are described. On the basis of what has been done, the essence of the main difficulties in the development of modern automobile industry in Iran is revealed, and ways of overcoming them are suggested.

Price consistency in the Leontief model

Le modèle de Leontief utilise en fait deux périodes, les périodes de base et courantes. Le modèle est résolu avec les indices de prix courants et les coefficients techniques de base. Le modèle physique correspondant est monopériodique: il est résolu avec les prix courants et les coefficients courants. Le modèle de Leontief n’est pas cohérent – les deux modèles divergent généralement – à moins que la matrice interindustrielle des quantités directes et indirectes de travail ne soit stable dans le temps. Cela implique que les coefficients de travail verticalement intégrés sont stables. Cette hypothèse est satisfaite lorsque les coefficients de production physiques et les coefficients de travail physiques sont stables dans le temps, deux hypothèses très fortes.

Economy wide impacts of ethanol and biodiesel policy in Canada: An input–output analysis

ABSTRACTThe Government of Canada has committed that Canada’s total greenhouse gas (GHG) emissions be reduced by 17% from 2005 levels by 2020. The new Renewable Fuels Regulations required 2% renewable content in diesel fuel and heating distillate oil and 5% for gasoline. This represents approximately 2.1 billion liters of ethanol and 600 million liters of biodiesel requirement per year, which would reduce GHG emissions by more than four million tones. Canada is expected to consume more fuel ethanol compared to its production capacity. The above mandates as well as the gap in consumption and production of biofuel will have enormous impact on the Canadian economy. In this backdrop, an input–output model of the Canadian economy is developed to estimate the macroeconomic impact of the ethanol and biodiesel production in Canada. The impacts on sectoral prices have also been calculated. Simulation exercises have been attempted to reach the mandates using modified Leontief model. Results show that agriculture sector is affected because of feedstock use in the biofuel sector. Mining and manufacturing industries also show a considerable impact. In addition, the impact on commodity prices cannot be ignored. Finally, to meet the target of Copenhagen commitment, the nation needs to revise the blending capacity of ethanol and biodiesel.

Reverse-engineering the business cycle with Petri nets

Petri nets are used to extract information from the complex and negative eigenvalues of a von Neumann model employing the US sector-level use tables from 1997 to 2013. The complex eigenvalues show a cyclical component having a period of about 10 years. Sectors that contribute most to the cyclical component are agriculture, mining, retail trade, construction, and utilities. Negative eigenvalues indicate the instability in the economy from 1997 to 2009. In 2010 a Neimark-Sacker bifurcation boundary is crossed, beyond which the economy exhibits damping. The point of critical damping is approached in 2012. In 2013 the economy exhibits over-damping. Keywords: Petri net, von Neumann growth model, Leontief model, eigenvalue, business cycle, use table, Neimark-Sacker bifurcation, over-damping JEL classification: C65, C67, E32

The Monetary Expression of Labor Time in a Dynamic Leontief model

In this paper, I present a dynamic linear production model of value and growth that explicitly incorporates the monetary expression of labor time (MELT) as an endogenous variable. The MELT is modeled as being determined by credit flows to the economy, given total current social labor. And the credit flows are formalized as the monetary base multiplied by money multiplier. In contrast to the standard money multiplier mechanism, the money multiplier in this paper is shaped by the combination between, on the one hand, capitalists’ demand for credit, which fluctuates in line with growth and profitability, and, on the other hand, the banking system’s capacity and willingness to accommodate the credit demand. Through a formal analysis and numerical simulation exercises of the model, it is found i) that the MELT converges to a constant steady state in the case of a balanced growth between output and monetary base while the steady state level is affected by the demand and supply conditions in the credit market, and ii) that, consequently, a divergence between the real growth and monetary growth is what makes the MELT change either at a constant rate or at a non-constant rate while the specific growth rate is affected by the growth differential and by the demand and supply conditions in the credit market.

A comparative analysis of productivity in Brazilian and Mexican manufacturing industries

This article analyses productivity trends in Brazilian and Mexican manufacturing industries between 1995 and 2009, a period in which international competition intensified sharply. A total of 14 manufacturing industries are considered, using two methods based on: (i) the Leontief (1951) model to measure the consumption of intermediate goods used in production; and (ii) the analysis of total factor productivity (tfp). The studies performed show that manufacturing trends have diverged in the two countries. In Mexico, an increased need for imported goods and services was offset by a reduction in domestic goods and service requirements, and an increase in the tfp of production. In the case of Brazil, the fact that manufactured goods markets are more isolated from foreign trade seems to have contributed to a weak productivity performance.

Sensitivity analysis of technology and supply change for CO2 emission intensity of energy-intensive industries based on input–output model

Sensitivity analysis based on Leontief model is applied for identifying the key factors leading to the change of CO2 emission or energy consumption in the competitive market from demand perspective. On the other hand, this kind of research from supply-side is also valuable for the economy with characteristics of rationing. Based on previous research achievements, this paper developed out sensitivity analysis based on the Ghosh model. In addition, we implemented sensitivity analysis based on the Leontief and Ghosh model respectively to study the most sensitive factors leading to the change of CO2 emission intensities of the six energy-intensive industries. In terms of 2010 Chinese symmetrical input–output table, the results obtained from the two sensitivity analyses are different. From the demand perspective, the level of production technology in the construction industry plays very important role in the CO2 emission intensity of energy-intensive industries. While, from the supply side, the adjustment of rationing in extraction of petroleum and nature gas should be paid more attention. At last, comparative analysis was carried out and corresponding policy suggestions were put forward. Emphatically, the method used in this paper could be applied to other industries within supply chains of a country, even in the world wide.

Extended passive filtering for discrete-time singular Markov jump systems with time-varying delays

In this paper, the extended passive filtering problem is investigated for a class of discrete-time singular Markov jump systems (SMJSs) with time-varying delays. Our attention is focused on the design of a general filter which contains the mode-independent part and the mode-dependent part to address the filtering issue. By employing some novel inequalities based on Abel lemma, some sufficient conditions which ensure the considered SMJSs to be stochastically admissible with a mixed H∞ and passive performance γ are established. Based on the conditions, an explicit expression for the desired filter is given. Two numerical examples and a dynamical Leontief model of economic systems are given to demonstrate the reduced conservatism and effectiveness of the presented general filter technique.

An Input‐Output Model of Extended Producer Responsibility

SummaryUnder an extended producer responsibility (EPR) system, when a producer delivers a product to the market it must also pay a takeback fee, which is used to cover the costs of end‐of‐life disposal. EPR systems are currently used in Europe and beyond to manage a variety of products, including packaging and used tires. In this article we develop an input‐output (IO) model that is able to assess the impacts of an EPR system, and is based on the waste IO (WIO) model. The WIO model is itself a hybrid‐unit model extension of the Leontief model that is able to capture the substitution effect between recycled/recovered material/energy from waste treatment and their non‐waste cognates. The resulting EPRIO model, besides the conventional direct and indirect effects of the Leontief model and the substitution effects of the WIO model, is able to capture the opportunity costs of financing the EPR system, and additionally requires the specification of an alternative waste management policy, with its own opportunity costs. The impact of an EPR policy is thus the difference between the impacts of the reference EPR and the alternative waste treament policies. The resulting model is illustrated with a simple example of a used tire management EPR system.

Measuring the economic landscape of Italy: target efficiency and control effectiveness

Key industry analysis is traditionally used to evaluate the role, or the impact of a given industry in the economy, through the determination of convenient indices. In assessing the economic impact of a specific industry or a set of industries on an economy, input–output analysis has become a popular method. However there are problems in determining and analyzing all the information that can be obtained from this analytical approach. In this paper, we attempt rely on different contributions within the approach to provide a picture for identifying those industries that give a relevant contribution, either direct and indirect, to the output generation. We also propose two new indices extracted from the reduced form of the Leontief model, Leontief inverse, that show the relevance of each industry in determining the target-response of the highest policy control. The industry weights within these structures and their changes can give a picture on how the reaction of the structure changes through time. A comparison with existing methods is performed in an exercise on actual data on the Italian economy over the period of 1995–2011 focusing on the inter industry interactions.

Disequilibrium Systems Representation of Growth Models—Harrod-Domar, Solow, Le-ontief, Minsky, and Why the U.S. Fed Opened the Discount Window to Money-Market Funds

One of the intriguing puzzles from the Global Financial Crisis of 2007-08 was this one: To save the U.S. economy, why did the U.S. Federal Reserve System (under the chair, Ben Bernanke) open its central bank discount window to the unregulated money-market funds? The discount window of a central bank is usually only open to legitimate banks; and money-market funds are not banks. But the action proved correct, and the crisis slipped into an economic recession and not a depression. Yet how can one theoretically explain Bernanke’s economic reasoning underlying this critical decision? For explanation of that event, we integrate several traditional economic models: 1) the growth models of Harrod-Domar and of Solow, 2) the production-consumption model of Leontief, and 3) Minsky’s price-disequilibrium model. The integration of these models is methodologically possible through a system dynamics representation of the algebraic forms of the traditional economic models. In a system dynamics model, economic flows become explicit, as well as do the connections between institutions. In this explanation, we see evidence for the economic postulate that: it is financial crises which trigger depressions and not production business-cycles. Production business-cycles trigger recessions.

The Effect of Sector Loss on the Internal Structure of Regional Economies

1. Introduction Input--Output models are being employed quite widely in the analysis of economic growth. Generally these models assume that certain forces will remain relatively unchanged as others act upon the economy, but this is never actually the case. It should be useful, therefore, to examine the impact upon the structure of the model of selected changes under conditions where all other forces are held constant. So, the main goal of this paper will be the investigation of the impact upon the internal structure of the regional economies of the complete loss of an industrial sector. This impact will be isolated by simply pulling the row and column representing each of the several sectors from the matrix and reinvested to develop new multipliers. Starting with a summary of the earlier methods we will apply it to the case of regionalized Greek economy. Next we will provide a statistical analysis of the results. Finally some conclusions will be proffered. 2. Review of Literature This study provides a useful framework to examine various kinds of possible hypothetical extraction linkages measures. The idea was to try to quantify how much an economy's total output would change if a particular sector was loss. The method of originally conceived by Paelinck, de Caevel, end Degueldre (1965) and later employed by Strassert (1968), Schultz (1976, 1977), Meller and Marfan (1981), Milana (1985), and Hemler (1991). A complete recapitulation for methods as well as their properties and their economic interpretation, can be found in Miller and Lahr (2001). In accordance to the literature a measure of the relative importance of any particular sector in an economy is found by extracting that sector. 3. Methodology The basic balance equation of Leontief's model is, x = [(I - A).sup.-1] y so, it may be assumed that one sector is extracted from the economy. Extraction of the jth sector for example, means that the jth row column of input matrix A are deleted (not replaced by zero). Thus the equation can be rewritten as: [bar.x](j) = [[I-[bar.A](j)].sup.-1] [bar.y] (j) (1) Where [bar.A] (j) is a (n-1) input matrix by deleting jth sector from A, also [bar.x](j) and [bar.y](j) are (n-1) dimensions vectors corresponding to output vector x and final demand vector y, respectively. If y and [bar.y](j) is given, the results [bar.x](j) should be less than x, [bar.x](j) Thus, the sum of the differential between the output vector x excluding jth element and [bar.x](k) can measure linkage effect of the extracted sector j on total output. Cella (1984) decomposed the matrix A and defined a total linkage effect of each sector and then identified into backward linkage and forward linkage. Accordingly, the basic balance equation of Leontief s model, X = A x+y, may be rewritten as: [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] (2) The sectors of the economy can be divided into one category that consists of the sectors that are to be extracted from the economy and category two that encompasses all the other sectors of the economy. If the extracted sectors do not sell or buy any intermediate products to or from the other sectors of the economy ([A.sub.11] and [A.sub.21] are equal to zero), then the above equation can be rewritten as: [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] (3) Where [[bar.x].sub.1] and [[bar.x].sub.2] are the output vectors after extraction. So, the solution equations of the extracted outputs may be obtained as: [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] (4) The total linkage effect (TL) can be defined as: TL = e'(x - [bar.x]) (5) Where [bar.x] demotes the output column vector of all sectors after the sector loss, e is a column summation vector (that is [e.sub.i] = 1 for all i). …

Maximum Singular Value of Matrix and its Economic Interpretation

We prove that the maximum singular value of the matrix and the corresponding singular vectors are the optimal solution for a special quadratic optimization problem. We consider the economic interpretation of the optimal solution for the linear model of production and for the productive Leontief model. We relate the optimal solution to the Frobenius number and vectors and compare the Frobenius numbers and maximum singular values for Leontief inverse matrix in the 15-sectoral balance of Ukraine for 2003–2009.

Domestic Final Demand as a Determinant of R&D Activity in Selected Central and Eastern European Countries

This article presents the results of an empirical study conducted based on selected countries in Central and Eastern Europe. The study focused on the impact of domestic final demand for products manufactured by individual industries on the R&D activity in the country. The main research tools are the Leontief model and R&D multipliers. The application of the input-output methods allows domestic R&D expenditures to be broken down into institutional sectors to establish what part of the expenditures is embodied in products manufactured to meet final household demand, in exports, etc.

Impact of National Food Security Act on Indian Economy:Application of Modified Leontief and Ghosh Models

The Government of India has enacted National Food Security Act, 2013 (NFSA). This paper measures the impact of implementing this Act on production structure of the economy. It applies modified Leontief and Ghosh models in Input-Output framework. A price model was also attempted to see the impact on sectoral prices. Results reveal that few sectors need to move in tandem to keep balance with food grain production. Overall, the country needs to gear up in terms of food grain productivity, otherwise NFSA must be supplemented by import which would entail a heavy burden on the exchequer.

Supply and demand biases in linear interindustry models

We explore the sectoral and aggregate implications of some endogeneization rules (i.e. on value-added and final demand) which have been common in the extended demand-driven Leontief model and have been recently proposed in the supply-driven Ghosh model. Extended linear models are refinements that aim at endowing the linear models with additional general equilibrium feedbacks. We detect that these rules may give rise in these models to some allegedly pathological and biased behavior. We find that in these models sectoral or aggregate output may not follow the logical and economically expected direct relationship with some underlying endogenous variables — namely, output and value-added in the supply-driven model and output and consumption in the demand-driven model. Because of their shared mathematical structure, whatever is or seems to be pathological in the Ghosh model also has a symmetric counterpart in the Leontief model. These would not be good news for the inner consistency of these linear models and raise doubts regarding the validity of their empirical applications. To avoid such possible inconsistencies, we propose new and simple endogeneization rules that have a sound economic interpretation.

On the Conditions of Price Consistency in the Input-Output Model

The input-ouput model remains the basis of most SAM or CGE models. It actually uses two periods: the prices indexes solve it with the current period coefficients; the corresponding physical model is monoperiodic: the current prices solve it with the base period coefficients. The Leontief model is not consistent --- both models diverge generally --- unless the interindustry matrix of direct and indirect quantities of labor is stable over time. This implies that the vertically integrated labor coefficients are stable. This assumption is satisfied when the physical production coefficients and the physical labor coefficients are stable over time, two very strong assumptions.

Inflation development model

Using Leontief's model, a complex price inflation model is developed that represents the inflation process as a dynamic process of varying the type of economic equilibrium. It is shown that the rate of inflation and the asymptotically stable vector of prices are determined by the Perron eigenvalue and the corresponding left-hand side eigenvector of a semipositive matrix that is constructed based on the input-output balance indicators.

Water Flows in the Spanish Economy: Agri-Food Sectors, Trade and Households Diets in an Input-Output Framework

Seeking to advance our knowledge of water flows and footprints and the factors underlying them, we apply, on the basis of an extended 2004 Social Accounting Matrix for Spain, an open Leontief model in which households and foreign trade are the exogenous accounts. The model shows the water embodied in products bought by consumers (which we identify with the Water Footprint) and in trade (identified with virtual water trade). Activities with relevant water inflows and outflows such as the agrarian sector, textiles, and the agri-food industry are examined in detail using breakdowns of the relevant accounts. The data reflect only physical consumption, differentiating between green and blue water. The results reveal that Spain is a net importer of water. Flows are then related to key trading partners to show the large quantities involved. The focus on embodied (or virtual) water by activity is helpful to distinguish indirect from direct consumption as embodied water can be more than 300 times direct consumption in some food industry activities. Finally, a sensitivity analysis applied to changes in diets shows the possibility of reducing water uses by modifying households' behavior to encourage healthier eating.

ADDING SUPPLY-DRIVEN CONSUMPTION MAKES THE GHOSH MODEL EVEN MORE IMPLAUSIBLE

Guerra and Sancho (2011) argue that adding a supply-driven consumption function to the Ghosh model diminishes its implausibility in the case of centrally planned economies. Extending the Leontief model with a demand-driven consumption function does make that model more realistic. Extending the Ghosh model, however, makes it even more implausible in the case of a market economy, while it becomes even more problematic as a guide for a centrally planned economy. The prime reason is that complementarities between inputs are negated, not only for firms, but now also for households. Consequently, industry and aggregate output may now increase, while corresponding value added decreases, and vice versa.