ECON301 Lecture 11: Lecture11
17 Oct 2015
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Document Summary
Recall that so far throughout the course we have discussed the perfect compliments production function. This functional form is often referred to as a fixed coefficients or fixed proportions function and was also named after. Professor wassily liontief as a result of his seminal work from the early 1950s. In its static version, liontief"s input output3 analysis deals with the following question: The reason for the terminology input output analysis now becomes quite clear. In turn, the output of many other industries will enter into the steel industry as inputs, and consequently the correct levels of these other products will depend partly upon the input requirements of the steel industry. In light of this inter-industry dependence, any set of correct output levels for the n industries must be one that is consistent with all of the input requirements in the economy (so that no bottlenecks will arise anywhere).
