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Demand-Driven and Supply-Sided Input–Output Models

Author

Listed:
  • Fidel Aroche Reyes

    (Universidad Nacional Autónoma de México (UNAM))

  • Marco Antonio Marquez Mendoza

    (Universidad Nacional Autónoma de México)

Abstract

In the demand-driven open input–output model, output is determined by final demand, given the production technology in every industry. On the contrary, in the supply-sided version, value added determines the level of output and producers must induce sales in order to achieve a desired level of income. This latter version of the model has been criticised and even rejected on its implausibility, its difficult interpretation and its bizarre implications, among other aspects. This paper argues that the supply-side model is not logically, mathematically or otherwise at odds with Leontief’s arguments. Rejection of the model is a matter of theoretical reading.

Suggested Citation

  • Fidel Aroche Reyes & Marco Antonio Marquez Mendoza, 2021. "Demand-Driven and Supply-Sided Input–Output Models," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(2), pages 251-267, June.
    • Handle: RePEc:spr:jqecon:v:19:y:2021:i:2:d:10.1007_s40953-020-00229-5
    DOI: 10.1007/s40953-020-00229-5
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    References listed on IDEAS

    as
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    Cited by:

    1. A. O. Baranov & A. V. Goreev, 2022. "Analysis of the Multiplier Effects Produced by Investment in a Dynamic Input–Output Model," Studies on Russian Economic Development, Springer, vol. 33(6), pages 687-696, December.

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    More about this item

    Keywords

    Input–output model; Demand-driven model; Supply-driven model; Leontief; Ghosh; Balanced growth;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies

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