| Input-output analysis | is a type of economic model that describes the interdependent
relationships between industrial sectors within an economy. It shows how the outputs of one sector flow into another sector as inputs |
| input-output model | was evolved into usable form by Wassily Leontief, a Russian-born economist that led him to earn his Nobel price in economics in 1973. |
| Input-Output Analysis Table | An industrial sector can be both a consumer of the outputs and a supplier of the inputs of other sectors in an economy. The input-output analysis model describes such an interdependent relationship. The analysis is typically presented in a matrix or table. The outputs of each sector are shown in rows and turn into the inputs of the other sectors listed in columns. |
| Input-Output Models Generate Their Estimate by Examining Three Types Of Economic Effect | The first effect is the direct impact
>indirect effect
>induced effect |
| direct impact | the direct effect the business has on the local community. direct employees, organizational spending, employee spending, and
spending by patients and visitors to the organization |
| indirect effect. | indirect effect is the impact the new business has on other local
industries when it purchases goods and services for the operations of the business |
| induced effect | spending the new income they are now receiving from the new business within the community. |
| Use of Input-Output Analysis | input-output model analyzes the physical quantities produced and consumed in each industry and thus determines the resource allocation to reach the balance.
contrasts with the material-balances planning method. The latter
method counts the raw materials and inputs available in an economy. It then balances
the inputs with the output targets of each industry respectively through a balance sheet. |
| Limitations of Input-Output Models and their Results | Input-output models is useful tools to estimate the effects new policy proposals, or
changes in spending, will have within an area. However, input-output models are based
on a strict set of assumptions, that need to hold for the results to be valid |
| input-output analysis model, | the total economy-wide impact of an economic event
can be analyzed from the initial demand change and its direct, indirect, and induced impacts.
allow local communities, businesses, and
governments to estimate the effect various economic changes will have on an area or
community. |
