On the conditions of validity of the value input-output model

Louis de Mesnard

No 2007-07, LEG - Document de travail - Economie from LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne

Abstract: The general aim of this paper is to show that even the simplest economic models may be largely trivial. One discusses how a value input-output model can be derived from a physical input-output model. In the physical input-output model, variables are physical quantities and prices and in the value input-output model, variables are quantities in currency units and price indexes. One demonstrates that the value model must be biperiodical, that is, never a-periodic as assumed by Leontief, and that price indexes must replace prices. Hence, two variants of the model are possible: (i) the operational model where the price indexes are the solution of the value model for the base year and (ii) the true model where the current prices solve the physical model for the current year. It is impossible to decide which model is the best. Both models diverge generally unless some strong hypotheses are made: stability of the vertically integrated physical coefficients of labor, or even stability of the physical structure itself. Working on an aperiodic value model is not innocent even if virtually all scholars and practitioners use to do by operational necessity. The results could be generalized to SAM models or to the SNA’s rectangular input-output model.

Keywords: Input-Output; Leontief; Price Index; Make-Use; SAM (search for similar items in EconPapers)
JEL-codes: C67 D57 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2007-11
New Economics Papers: this item is included in nep-cba
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lat:legeco:2007-07

Access Statistics for this paper

More papers in LEG - Document de travail - Economie from LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne Pôle d'Economie et de Gestion - 2, bd Gabriel - BP 26611 - F-21066 Dijon cedex - France. Contact information at EDIRC.
Bibliographic data for series maintained by ().