A differential approach to input-output analysis

The differential production theory approach is applied to input-output analysis under the assumption that each industrial sector behaves as a homothetic cost-minimizing firm. This yields substitution terms which take a simple form under input independence.     

Accounting for technical substitution in the input-output model

Input-output analysis is a general equilibrium economic model that is being applied with increasing frequency to situations in which the input patterns of various economic activities are bound to change. Applications of the model in this context unduly strain the model's customary assumption of fixed coefficients, an assumption which precludes the substitution of inputs in production processes. The focus here is on the development of a general procedure for incorporating input substitution under various sets of conditions into the input-output model.     

Applying input-output analysis to scenario analysis of ecological footprints

Application of input-output analysis to ecological footprints (EFs) is shifting from an ex-post static calculation toward an ex-ante scenario analysis for enhancing the policy relevance of EF analysis. This change in application prompts two issues requiring careful examination: (1) what is measured by Leontief inverses or extended environmental Leontief inverses, and (2) whether a sector's land multiplier (or compositions of land multiplier) can appropriately reflect the effect of delivering one unit of the sector's output to final demand on the required area(s) of production lands used by the sector itself and by other producing sectors whose products are contributed directly and indirectly to its production. The underlying message of these two questions is whether the assumed linear marginal relationship between a sector's output and its intermediate inputs (input-output coefficients)—a critical assumption made by W. Leontief to transform a transactions table from an accounting framework into the input-output model—can be extended to assume that the marginal relationship between a sector's output and the area of production land it uses for generating output is fixed (land-output marginal coefficient equal to average coefficient). By reviewing the literature on input-output analysis and its application to environmental issues and by theoretically and empirically examining the relation between sector output and land appropriation, this study advises against the use of land multipliers or their compositions in the EF scenario analysis.To apply the input-output model to EF scenario analysis for enhancing policy relevance with due attention to the relationship between sector output and land appropriation, this study suggests a two-stage EF calculation procedure. In the first stage, the input-output application estimates only the required raw materials (or generated pollutants) for meeting a given consumption pattern, which is the objective of environmental input-output analysis; in the second stage, the estimated amount of raw materials or pollutants is converted into land/water area, and a choice of conversion methods is suggested according to the research questions and the availability of conversion methods and required data.     

Input-output models, directed graphs and flows in networks

This article demonstrates that a dual pair of input-output price and quantity models, taken together, constitutes a composite network flow model. The network flow model has become a dominant analytical tool within the fields of operations analysis and electrical engineering, and the aim of the article is to enable input-output users within non-standard applications to take advantage of the large body of literature within these disciplines. Through a simple example it is shown that the solution of a dual pair of input-output models is a special case of the general problem of finding a minimum cost circulation in a transportation network. Second, it is shown that the common method of determining quantities and prices in input-output models is identical to the classical node method for determination of currents and voltages in an electrical network. The theory of transportation networks offers well developed methods for analysis of capacity constraints on the network flows, while the theory of electrical networks supplies methods for analysis of models with price sensitivities and for dynamic analysis. In addition, the elegant symmetry of currents and voltages in electrical networks contributes significantly to a better understanding of the logical relationship between price and quantity models.     

ADAPTATION OF DETAILED INPUT-OUTPUT INFORMATION: RESTRUCTURING AND AGGREGATION

This article deals with problems of construction of "square" input-output tables from detailed commodity and industry data and operationalization of the tables for use in econometric modeling. The adaptation procedure suggested is quite new and involves perfect and imperfect aggregation, and suppression of insignificant cells of the tables.
Using slight modifications of well-known input-output methods (to make definitions conform to general concepts of network flow theory) it is shown that the construction and aggregation of tables, as well as the suppression of minor cells, can be viewed as still higher levels of the very same process: the search for a manageable model with roughly the same abstract properties as the original detailed, but overwhelmingly large, model.
Simultaneously a consistent input-output terminology is suggested with fewer symbols and more rules than usual.
The adaptation procedure has been applied successfully to the 1982 version of ADAM, the macroeconometric model operated by Danmarks Statistik (the Danish Central Bureau of Statistics).     

Energy import costs in a flexible input-output price model

A fundamental assumption of the input-output (IO) model is a fixed relationship between interindustry flows. In the price version of the model, the assumption of fixed-coefficients prevents the optimal mix of inputs being adjusted when relative prices change. The aim of this paper is to evaluate the role of energy import prices in the IO price model without the usual non-substitution technology inherent to the input-output structure. The analysis includes alternative substitution possibilities for the elements that comprise the sectoral costs, which are empirically implemented from an IO dataset. The various substitution scenarios are defined by three different cost structures: the Leontief, Cobb-Douglas and Constant Elasticity of Substitution (CES) functions. The empirical application to the Catalan economy illustrates the relevance of the flexibility option used for explaining the quantitative influence of energy import prices on domestic prices. Adapting the traditional input-output model to include factor substitution makes it possible to overcome the rigidity in transmitting price impacts, and illustrates a range of possible effects.     

Does the exchange rate pass-through into prices change when inflation targeting is adopted? The Peruvian case study between 1994 and 2007

This paper analyzes whether the exchange rate pass-through into prices changed when the inflation targeting scheme was adopted in Peru. First, a simple dynamic stochastic general equilibrium model is simulated, which shows that adopting this scheme induces an increase in exchange rate volatility. Furthermore, applying the theory of the currency denomination of international trade, it is demonstrated that increased exchange rate volatility reduces the share of firms that set their prices in foreign currency. Given that the pass-though has a direct relationship with this share, it is shown that adopting inflation targeting generates a pass-through contraction. Second, we empirically test whether the Peruvian Central Bank’s decision to adopt inflation targeting in January 2002 actually had an effect on the pass-through estimating a time-varying vector autoregressive model which allows for an asymmetrical estimation of the pass-through. It provides parameters for both the pre and post inflation targeting regimes based on the assumption that the transition from one regime to the other is smooth. An analysis of the generalized impulse response functions reveals that the decision to adopt inflation targeting significantly decreased the exchange rate pass-throughs into import, producer, and consumer prices. The results are consistent with economic theory and are robust to the specification of parameters of the model.     

对投入产出模型性质的理论思考#br#

投入产出方法作为一种经验研究方法被大量用于实际经济问题的分析，但是模型假定与方法性质的理解却是合理使用投入产出方法的前提。投入产出模型的突出特点表现为以生产为中心、结构性和方法的系统性。投入产出需求拉动的数量模型和成本推动的价格模型构成了其核心分析框架，两类模型都是以生产为中心；数量模型和价格模型所体现的产业间相互影响不仅包括直接联系，也包括间接联系，从而具有结构性特征。从系统性来看，这一分析框架以生产为核心形成模型的内生边界，并可以进一步对内生边界和概念进行调整；此外，通过引入分配系数建立供给驱动模型，以及与优化模型相结合扩展为广义投入产出模型体系，构成系统性的分析框架。为此，本文从投入产出模型的基本性质出发，对投入产出方法结构性的内涵、模型系统内生边界的划分和调整、需求拉动和供给推动模型体系的对称性，以及广义投入产出体系的对偶性等若干基本问题展开充分讨论，由此提出笔者对投入产出方法性质的思考。     

IMPORT FORECASTS FOR INPUT-OUTPUT MODELS*

The paper presents forecasting models for (1) the share of competitive imports in the total demand for a commodity group and (2) the level of demand for competitive imports of a commodity group. The two forecasting models are used, respectively, with (1) input-output models which incorporate market share parameters as one vector of coefficients and (2) input-output models which assume imports have been determined autonomously. It is shown that these two types of input-output models can be made workable by prefixing one or other of the import forecasting models to the input-output model. Tests are made of the forecasting ability of the combined models.     

Localized Technological Progress And Industry Structure: An Empirical Approach *

Modem innovation theory holds that the choice of production technique and technical porgress are unseparable activities so that technological progress can be described as localized. Based on this conception one has to expect an intra-sectoral firm heterogeneity in the production techniques applied and the technical efficiency achieved which contrasts to the presumption of intra-sectoral homogeneity as suggested by neoclassical theory. For measuring intra-industry heterogeneity an empirical tool is required which does not rest on the assumption of homogeneity, i.e. on a common production function for all firms under consideration. The method which does not require this assumption, Data Envelopment Analysis, is non-parametric, allows for firm-specific production functions and helps to determine differences in both technical efficiency and production technique applied. This tool is introduced in its basic formulation, its main features are discussed on ihe basis of modern innovation theory, and an empirical analysis for the German machinery, electronics and chemical industry is presented.     

投入产出分析在制药企业生态工程中的应用

本文运用投入产出理论与方法,对工业企业生态系统的投入产出进行了分析,界定了工业企业生态工程的投入产出,给出与投入产出有关概念的量化定义。工业企业生态工程作为一个投入产出系统,不仅仅是传统意义上的投入产出,它不仅包括经济投入与经济产出,还包括生态投入与生态产出。在工业企业生态系统中,各部门、各分厂及车间的生产过程不是孤立和封闭的,而是通过物质流、能量流、信息流和价值流相互联系的,并支撑其投入产出结构,根据这一原理,我们构建了工业企业生态系统基于物质流的投入产出表。在调查分析的基础上,我们结合RH制药企业构建了生态投入产出模型,填制了其投入产出表,测算了其消耗系数,为企业进一步推进生态工程提供依据。     

THE SEERS MODIFIED INPUT-OUTPUT TABLE: SOME PROJECTION TECHNIQUES

Dudley Seers and his colleagues in working with various less developed economies have proposed a modified version of an input-output table for making projections and tests of consistency in planning. The table includes only the important inter-sectoral flows. By making a simplifying assumption with regard to the non-included inter-sectoral flows, an algebraic formulation of the modified input-output table is possible. The resulting matrix of input-output coefficients and final demands can be transformed into a Leontief input-output matrix which is block triangular and composed of two-blocks, one of which is diagonal. Given a set of final demands it is very easy to solve for the total output of each of the sectors. The amount of computation involved is directly related to the number of intersectoral flows included in the original modified input-output table.     

Cognitive constraints, contraction consistency, and the satisficing criterion

A theory of decision making is proposed that offers an axiomatic basis for the notion of “satisficing” postulated by Herbert Simon. The theory relaxes the standard assumption that the decision maker always fully perceives his preferences among the available alternatives, requiring instead that his ability to perceive any given preference be decreasing with respect to the complexity of the choice problem at hand. When complexity is aligned with set inclusion, this exercise is shown to be equivalent to abandoning the contraction consistency axiom of classical choice theory.     

Endogenous fluctuations induced by nonlinear pollution accumulation in an OLG economy and the bifurcation control

This paper aims to study the influence of nonlinear pollution accumulation on economic growth by incorporating the nonlinear pollution accumulation into an OLG model. It is shown that the nonlinearity can yield very complex dynamics, including the flip bifurcation resulting in sustained fluctuations in economy. This indicates that the nonlinear pollution accumulation can be a source of intergenerational inequity. To stabilize the complex motion and thus to control the fluctuations, a bifurcation control method from control theory is proposed. The welfare analysis shows the sustainable development criterion can be met in the controlled system but not in the original system.     

The Arrow-Debreu model: How math can hide a fatal conceptual error

I argue that math, like love, can cover a multitude of sins, and I use the neoclassical object of adoration, the Arrow-Debreu model, as the case in point. It is commonplace that the Arrow-Debreu (AD) model of general equilibrium does not describe the real world, but it is equally commonplace to accept it as representing the pure logic of the competitive capitalist economy in an idealized world free of transactions costs. I show that the AD model fails even as an idealized model; it actually mistakes the logic of pure capitalism. Unlike McKenzie’s model of idealized general equilibrium under constant returns to scale, Arrow and Debreu claim to have shown the existence of competitive equilibrium under decreasing returns to scale and positive pure profits. The AD model (again unlike the McKinzie model) needs to assign the profits to individuals and this is done using the notion of “ownership of the production set.” But this notion suffers from a fatal ambiguity. If Arrow and Debreu interpret it to mean “ownership of a corporation” then a simple argument in the form “labor can hire capital or capital can hire labor” defeats the alleged necessity of assigning residual claimancy to the corporation. A given corporation may or may not end up exploiting a set of production opportunities (represented by a production set) depending on whether it hires in labor and undertakes production or hires out its capital to others (all by assumption at the parametrically given prices). In the latter case, residual claimancy is elsewhere. There is no such property right as “ownership of a production set” in a private property market economy. The legal party which purchases or already owns all the inputs used up in production has the defensible legal claim on the outputs: there is no need to also “purchase the production set.” At any set of prices that allow positive pure profits, anyone in the idealized AD model could bid up the price of the inputs and thus try to reap a smaller but still positive profit. Therefore,pace Arrow and Debreu, there could be no equilibrium with positive pure profits. In the Appendix, the property rights fallacy that afflicts the AD model is shown to also afflict orthodox capital theory and corporate finance theory.     

Does the aggregate production function imply anything about the laws of production? A note on the Simon and Shaikh critiques

The aggregate production function (especially the Cobb–Douglas) is widely used in both applied and theoretical work, in spite of the large number of criticisms of it that have been advanced since its inception. Two related criticisms by Simon and Levy (1963) and Shaikh (1974) are particularly damaing since they have shown that if factor shares are stableanyunderlying technology will generate a Cobb–Douglas relationship. This argument seems to have been largely ignored in the literature or, by implication, not seen as particularly important. The purpose of this paper is to assess and extend these criticisms. New empirical evidence is presented which, it is argued, illustrates the former. Furthermore, it is shown that a Kaleckian mark-up model will equally give rise to a Cobb–Douglas even though, of course, no neoclassical assumptions are invoked. It is concluded that the Cobb–Douglasper se can give no independent corroboration of either the marginal productivity theory of distribution or the assumption of perfect competition.     

Global factor trade with differentiated factor prices and factor intensities

Abstract .  Relaxing the assumption of internationally identical factor intensity techniques in the HOV model creates two challenges. First, computing actual factor intensity techniques of different countries requires detailed input-output tables and factor usage data, which are not always available. Second, determinants of the factor intensity technique differences across countries need to be identified. This paper explores the role of relative factor price differences in the determination of factor intensity technique differences across countries and proposes an inferring method that infers factor intensity techniques of different countries based on relative factor price differences. The HOV model is then modified accordingly.     

跨国公司收入最大化的行为模型

Departing from the traditional profit-maximization assumption underlying the theory of the multinational enterprises (MNEs), this paper proposes a model of the revenue-maximizing MNE subject to the profit constraint. The nonlinear programming techniques are used for the equilibrium analysis of the MNE’ s decision-making. A set of optimal conditions is derived regarding the quantity of output, volume of intra-firm trade, allocation of multinational production, as well as transfer prices in both exogenous and endogenous cases. Under the context, a comparison of the behavioral differences is made between the revenue-maximizing MNE and the profit-maximizing MNE.      

Some comparative-statics results for nonlinear input-output models of a multisectored economy,and related results for nonlinear price-demand relations

For a nonlinear version of the linear input-output model of Leontief, we consider the effect, on the vector x of total gross outputs, of changes in the components of the final-demand vector c. For example, it is shown that, for a certain important class of models, the “large-change elasticity” of any component of x, with respect to any component of c, is less than or equal to unity. Some similar results are proved concerning properties of nonlinear price-demand relations for the case in which all goods are weak gross substitutes. Unlike earlier work in this general area, we do not introduce hypotheses concerning the indecomposability or homogeneity of certain mappings. For that reason, the results are valid for the price-demand relation for a single firm, or for any collection of firms.     

INDIRECT PRICING THEORY OF THE FIRM: A GENERAL-EQUILIBRIUM ANALYSIS INVOLVING PRODUCTION TECHNOLOGY AND MANAGEMENT SERVICE

Abstract.  This paper develops a general-equilibrium model that involves production technology and management service to study the emergence of firms from the perspective of saving transaction costs. Inframarginal analysis is used to formalize Coase and Cheung's theory of the firm and to generalize Yang and Ng's indirect pricing theory of the firm. Not only the emergence of firms, their growth and contraction, but also the relevant conditions for the existence of technology entrepreneurs and professional management are also investigated.