Leontief Prices Model Modèles de Simulation Université Paris IX Dauphine, October 17th 28th 2005 Master Économie et Affaires Internationales.

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Leontief Prices Model Modèles de Simulation Université Paris IX Dauphine, October 17th 28th 2005 Master Économie et Affaires Internationales

Dr. de Arce & Dr. Mahía - UAM Statistics Input – Output “Destination Tables: products and branches”

Dr. de Arce & Dr. Mahía - UAM Classical Input-Output Structure

Dr. de Arce & Dr. Mahía - UAM Leontief Prices Model (I) Production Coefficients: demand of sector “i” from sector “j” over total production in sector “i”. Cost structure of each sector (interdependence between sectors)

Dr. de Arce & Dr. Mahía - UAM The total demand of each sector could be computed subtracting from its production, the part delivered to the other sectors, that also, could be computed using the production coefficient that we have described before. The A Matrix is composed by all of these coefficients. Leontief Prices Model (II)

Dr. de Arce & Dr. Mahía - UAM From the previous equation, we can easily obtain the “Leontief Inverse Matrix” that will be a powerful tool to simulate the effect of changes in demand over the total production in a country Leontief Prices Model (III)

Dr. de Arce & Dr. Mahía - UAM Value Added and Employment Generation from the Leontief Model: Static vs. Dynamic coefficients of VA and Employment