Most national accounting systems are based on the Make-Use model. Two hypotheses are traditionally made featuring either industry-based (IBT) or commodity-based (CBT) technologies. IBT corresponds to a consistent demand-driven model: its solution can be explained as a circuit or in probabilistic terms, even in the rectangular case. CBT obliges to compute an inverse matrix which is impossible when rectangular, fails to indicate how a commodity is distributed throughout industries and precludes interpretation of CBT as a circuit or in probabilistic terms. CBT should be interpreted as supply-driven to recover its coherence as a circuit even in the rectangular case.
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Paper provided by LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne in its series LATEC - Document de travail - Economie (1991-2003) with number
2001-05.
Length: 31 pages Date of creation: Mar 2001 Date of revision: Publication status: published : “Understanding the shortcomings of commodity-based technology in input-output models: an economic-circuit approach”, Journal of Regional Science, 2004, 44, 1, 125-41. Handle: RePEc:lat:lateco:2001-05
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