1. Leontief and Ghosh Models Modèles de Simulation Université Paris IX Dauphine Prof. Rafael de Arce Master Économie et Affaires Internationales

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

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

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

5. 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)

6. 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)

7. 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)

8. Dr. de Arce & Dr. Mahía - UAM I-O Model Implementation: Production Efect FINAL DEMAND SHOCK DIRECT DEMAND EFECT INDIRECT DEMAND EFECT DISTRIBUTION BY BRANCHES Δ PRODUCTION / A.V Δ EMPLOYMENT Δ PRODUCTION / A.V Δ INTERMEDIATE DEMAND (Leontief Inverse) TOTAL DEMAND EFECT: DIRECT + INDIRECTS Δ PRODUCTION / A.V Δ EMPLOYMENT

9. Dr. de Arce & Dr. Mahía - UAM I-O Model Implementation: Demand Efect Δ TOTAL PRODUCTION DIRECT DEMAND EFECT INDIRECT DEMAND EFECT DISTRIBUTION BY BRANCHES Δ PRODUCTION / A.V Δ EMPLOYMENT Δ PRODUCTION / A.V. Δ INTERMEDIATE DEMAND (Leontief Inverse) TOTAL DEMAND EFECT: DIRECT + INDIRECTS Δ PRODUCTION / A.V. Δ EMPLOYMENT GROSS SALARIES YIELDTAXESSAVE Δ CONSUMPTION YIELD Δ EMPLOYMENT

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

11. Dr. de Arce & Dr. Mahía - UAM Ghosh VA Model (I) Distribution Coefficients: sells of sector “i” to intermediate (other sectors) and final demand (consumption, investment, exports) over total production in sector “i”. Distribution structure of each sector (interdependence between sectors)

12. Dr. de Arce & Dr. Mahía - UAM I-O Ghosh Model Implementation: Production Efect NEW DIRECT VALUE ADDED Value added Coefficient. VA(I-D) -1 +[(Tr+M+IVA)*D](I-D) -1 Δ TOTAL VALUE ADDED (DIRECT + INDIRECT) Δ BRANCHES PRODUCTION (DIRECT + INDIRECT)