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The Demand Driven and the Supply-Sided Input-Output Models. Notes for the debate

Listed author(s):
  • AROCHE REYES, FIDEL
  • MARQUEZ MENDOZA, MARCO ANTONIO

The demand-driven version of the open Input-Output model determines production as a function of final demand, given the production technology. On the contrary, in the supply-sided version, value added determines 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 the bases of its implausibility, its difficult interpretation and its bizarre implications. This paper argues however that the logic of the supply-side model is not mathematically at odds with Leontief’s arguments. Rejection of the model is a matter of theoretical interpretation.

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File URL: https://mpra.ub.uni-muenchen.de/61132/1/MPRA_paper_61132.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 61132.

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Date of creation: Jan 2013
Handle: RePEc:pra:mprapa:61132
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  1. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521517133, March.
  2. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023, March.
  3. Prem S. Laumas, 1976. "The Weighting Problem in Testing the Linkage Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 90(2), pages 308-312.
  4. F Giarratani, 1976. "Application of an Interindustry Supply Model to Energy Issues," Environment and Planning A, , vol. 8(4), pages 447-454, June.
  5. Hazari, Bharat R, 1970. "Empirical Identification of Key Sectors in the Indian Economy," The Review of Economics and Statistics, MIT Press, vol. 52(3), pages 301-305, August.
  6. F Giarratani, 1976. "Application of an interindustry supply model to energy issues," Environment and Planning A, Pion Ltd, London, vol. 8(4), pages 447-454, April.
  7. Louis de Mesnard, 2009. "Is The Ghosh Model Interesting?," Journal of Regional Science, Wiley Blackwell, vol. 49(2), pages 361-372.
  8. Bon, Ranko, 1986. "Comparative stability analysis of demand-side and supply-side input-output models," International Journal of Forecasting, Elsevier, vol. 2(2), pages 231-235.
  9. Leroy P. Jones, 1976. "The Measurement of Hirschmanian Linkages," The Quarterly Journal of Economics, Oxford University Press, vol. 90(2), pages 323-333.
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