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Straightening out the concept of direct and indirect input requirements

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  • Ferran Sancho

    ()
    (Department of Economics)

Abstract

Gim & Kim (1998) proposed a generalization of Jeong (1982, 1984) reinterpretation of the Hawkins-Simon condition for macroeconomic stability to off-diagonal matrix elements. This generalization is conceptually relevant for it offers a complementary view of interindustry linkages beyond final or net output influence. The extension is completely similar to the ‘total flow' idea introduced by Szyrmer (1992) or the ‘output-to-output' multiplier of Miller & Blair (2009). However the practical implementation of Gim & Kim is actually faulty since it confuses the appropriate order of output normalization. We provide a new and elementary solution for the correct formalization using standard interindustry concepts. The advantage of our approach is that it unravels and clarifies the step by step actual mechanisms behind the accounting rules.

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File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I1-P47.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 32 (2012)
Issue (Month): 1 ()
Pages: 502-509

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Handle: RePEc:ebl:ecbull:eb-11-00758

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Keywords: output multipliers; input multipliers;

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  1. Theodore Mariolis & Eleftheria Rodousaki, 2011. "Total Requirements for Gross Output and Intersectoral Linkages: A Note on Dmitriev's Contribution to the Theory of Profits ," Contributions to Political Economy, Oxford University Press, vol. 30(1), pages 67-75.
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Cited by:
  1. Ferran Sancho, 2013. "Some conceptual difficulties regarding ‘net’ multipliers," The Annals of Regional Science, Springer, vol. 51(2), pages 537-552, October.

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