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A non-linear Leontief–type input-output model

Author

Listed:
  • Michaelides, Panayotis G.
  • Belegri-Roboli, Athena
  • Markaki, Maria

Abstract

In this paper, we present an econometric model based on Leontief’s IInput–Output (IO) approach. In this context, the paper puts forward an econometric approach to estimating an IO Leontief – type coefficients matrix which has several advantages and constitutes an extension to the standard IO model. Analytically, the original model is a description of the situation when (i) linear relations express the production process of each sector, (ii) each sector experiences constant returns to scale, and (iii) the technical coefficients in the conventional IO table are fixed for several years and based on a-priori calculations using traditional survey methods made by practitioners, and not on econometric estimations using real–world data on economic aggregates. The proposed method’s main advantage is its simplicity, flexibility, and capability of including real-world information on economic aggregates that could also be used as a portion of a dynamic model. Measures such as Returns to Scale (RTS), Total Factor Productivity (TFP), and Technical Efficiency (TE) may be computed easily.

Suggested Citation

  • Michaelides, Panayotis G. & Belegri-Roboli, Athena & Markaki, Maria, 2012. "A non-linear Leontief–type input-output model," MPRA Paper 74447, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:74447
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    References listed on IDEAS

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    1. Gallant, A. Ronald & Jorgenson, Dale W., 1979. "Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 275-302.
    2. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    3. Amemiya, Takeshi, 1977. "The Maximum Likelihood and the Nonlinear Three-Stage Least Squares Estimator in the General Nonlinear Simultaneous Equation Model," Econometrica, Econometric Society, vol. 45(4), pages 955-968, May.
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    More about this item

    Keywords

    Leontief; input-output model; econometrics; RTS; TFP; TE;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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