What Is an Input-Output Analysis?

Input-output analysis is the method used to study the balanced relationship between various sectors of the national economy. Starting from the assumption of general equilibrium, the dependence of the product volume of each department is expressed as a system of equations. Based on statistical materials, a matrix or checkerboard-shaped balance table is made to show the overall picture of the balance between the supply and demand of products in various sectors of the national economy; The ratio of the quantity of products required in other sectors (called the "technical coefficient") to determine the relevant parameter values in the above equations. From the equations containing these parameter values, infer the impact of changes in the production and sales of one sector on other sectors, and calculate the various productions required to meet a certain "final consumption" (ie, personal and government consumption, investment, and output) in society. The total amount of these products and the prospects for the development of the national economy. ^[1]

Input-output analysis

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Input-output analysis is the method used to study the balanced relationship between various sectors of the national economy. Starting from the assumption of general equilibrium, the dependence of the product volume of each department is expressed as a system of equations. Based on statistical materials, a matrix or checkerboard-shaped balance sheet is produced to show the overall picture of the balance between the supply and demand of products in various sectors of the national economy; and from this, the total product of each sector and its total production The ratio of the quantity of products required in other sectors (called the "technical coefficient") to determine the relevant parameter values in the above equations. From the equations containing these parameter values, infer the impact of changes in the production and sales of one sector on other sectors, and calculate the various productions required to meet a certain "final consumption" (ie, personal and government consumption, investment, and output) in society. The total amount of these products and the prospects for the development of the national economy. ^[1]

Input-output analysis is an economic quantitative method that studies the interdependence of input and output between various parts of the economic system.

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It is L. Walras's general equilibrium theory. In China, after transforming the input-output analysis from an economic theory, it is usually called the input-output principle. Its theoretical basis includes the theory of labor value, the production of production materials and the production of consumer materials, and so on.

Based on the input-output table, the following input-output models can be established

The above is a static input-output model, which can be used for economic analysis, policy simulation, planning demonstration, and economic forecasting, and opens the way for the application of electronic computers in economic management.

The input-output analysis has been put forward for nearly half a century, and during this time, it has developed greatly. In addition to the product models mentioned above, there are fixed asset models, production capacity models, investment models, labor models, and models that study special issues such as population and environmental protection. In addition to the static models mentioned above, there are also dynamic models and optimization models.