1 / 14

Building an IO Model

Building an IO Model. Form Input-Output Transactions Table which represents the flow of purchases between sectors. Constructed from ‘Make’ and ‘Use’ Table Data – purchases and sales of particular sectors. Building an IO Model.

alvin-wyatt
Download Presentation

Building an IO Model

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Building an IO Model • Form Input-Output Transactions Table which represents the flow of purchases between sectors. • Constructed from ‘Make’ and ‘Use’ Table Data – purchases and sales of particular sectors.

  2. Building an IO Model • Sum of Value Added (non-interindustry purchases) and Final Demand is GDP. • Transactions include intermediate product purchases and row sum to Total Demand. • From the IO Transactions table, form the Technical Requirements matrix by dividing each column by total sector input – matrix D. Entries represent direct inter-industry purchases per dollar of output.

  3. Transactions Table Xij + Fi = Xi; Xi = Xj; using Aij = Xij / Xj (Aij*Xj) + Fi = Xi in vector/matrix notation: A*X + F = X => F = [I - A]*X or X = [I - A]-1*F

  4. Two Sector Numerical Example • Reading across: Sector 1 provides $150 of output to sector 1, $500 of output to sector 2, and $350 of output to consumers. • Reading down: Sector 1 purchases $150 of output from sector 1, $200 of output from sector 2, and adds $650 of value to produce its output • Transaction Flows ($) are at right.

  5. Complete Transactions Matrix

  6. Requirements Matrix • Creating the A matrix • Aij = Xij / Xj • So, to make $1 of output from sector 1 requires $0.15 of output from the same sector.

  7. Production of Good 1 in our Two Sector Model $ 0.15/$ Good 1 $ 1 Good 1 Sector 1 $0.2/$ Good 2 To produce $1 of output from sector one requires $0.15 of goods from the sector itself, plus $0.2 of goods from sector 2. Sector 2

  8. Production of Good 2 in our Two Sector Model To produce $1 of output from sector two requires $0.05 of goods from the sector itself, plus $0.25 of goods from sector 1. Sector 1 $0.25/$ Good 2 $ 0.05/$ Good 2 Sector 2 $ 1 Good 2

  9. Leontief Inverse • [I – A] • [I – A] -1 or X = [I - A]-1*F

  10. Add Final Demand • Determine the effects of $100 additional demand from Sector 1 • X = [I – A] -1 F • Total Outputs: $125.4 of Sector 1 and $26.4 of Sector 2, or $ 151.8 Total. • Direct intermediate inputs: $15 of 1 and $20 of 2 for $100 output of 1 (or $ 135)

  11. Add Environmental Effects • Add sector-level environmental impact coefficient matrices (R) • [effect/$ output from sector] • Example: Hazardous Waste Generation (R) • R1 = 100 grams/$ in Sector 1 • R2 = 5 grams/$ in Sector 2

  12. Production of Waste in our Two Sector Model $ 0.15/$ Good 1 $ 1 Good 1 Sector 1 Haz. Waste 100 gm/$ Good 1 $0.2/$ Good 2 Haz Waste 5 gm/$ Good 2 Sector 2

  13. Production of Waste in our Two Sector Model Sector 1 Haz. Waste 100 gm/$ Good 1 $0.25/$ Good 2 $ 0.05/$ Good 2 Haz Waste 5 gm/$ Good 2 Sector 2 $ 1 Good 2

  14. Production of Waste in our Two Sector Model • B = R*X • 12,540 grams of hazardous waste generated by sector 1 • 132 grams of hazardous waste generated by sector 2 • Total of 12672 grams hazardous waste generated

More Related