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The theoretical input-output system with flexible technological coefficients based on the two-stage level CES-type production function

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  • Han, Han Soo

Abstract

An economy is a complex organizational system. In such an economic system, the various economic factors (behaviors) have influences on or are affected by the economic phenomena through causal interactions of the price-resource mechanism. In other words, the economic phenomena vary in response to the various economic behaviors, and vice versa. They are interdependent in an economic system;Under such an interdependent economic system, a method of systematically analyzing the interrelationships among the economic behaviors is the input-output analysis (system). The system of input-output analysis was first developed by W. W. Leontief on the bases of both Quesnay's Tableau Economique idea (scheme) and Walras's general equilibrium framework. And the Leontief input-output system has been utilized by many economists since Leontief's development of it;However, such an input-output system has the following characteristics. First, it uses the most rigid type of production function--the so called Marx-Leontief production function. Second, as a result of it, it utilizes the fixed (or constant) input-output coefficients which cannot reflect the factor substitution effects occurring in the production processes in prices and outputs;The purpose of this study thus develops the theoretical input-output system with flexible technological coefficients based on the two-stage level CES-type production function which can reflect the effects of factor substitution, technology improvement, and relative price in an economy. In addition, on the basis of that theoretical input-output system, the economic effects of the change in the exogenous economic variable such as the world (international) market prices of the imported materials (e.g., oil) on the prices of outputs, the equilibrium outputs, and the domestic resource allocations in a small importing country.

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  • Han, Han Soo, 1990. "The theoretical input-output system with flexible technological coefficients based on the two-stage level CES-type production function," ISU General Staff Papers 1990010108000010500, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1990010108000010500
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