Input-Output Analysis: A Primer

Input-output (IO) analysis is a modeling framework that records the business transactions in an economy over a given time period. It is used in any number of ways, all of which are intended to improve our understanding of how industries in an economy are interrelated. The economy under study can be a national economy, a multi-state, state, or multi-county regional economy. As its name suggests, the IO accounting framework describes and depicts the input and output relationships of all industries in an economy. The utility of the IO framework is manifold. Most immediately, the inter-industry transactions table, or input-output matrix, describes the direct sales and purchases relationships among industries. The framework, in its several forms, is useful for assessing the impacts of changes in economic activity within or outside a region and for targeting industries for retention or recruitment policies. This brief monograph introduces the IO framework and addresses these and related concepts and applications.