Technology of Input–Output Analysis with CES Production: Application for Studying the Kazakhstan Supply Chain during the COVID-19 Pandemic

Askar Boranbayev (), Nataliia Obrosova () and Alexander Shananin
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Askar Boranbayev: Department of Computer Science, Nazarbayev University, 53 Kabanbay Batyr Ave., Astana 010000, Kazakhstan
Nataliia Obrosova: Moscow Center for Fundamental and Applied Mathematics, Lomonosov Moscow State University, GSP-1, Leninskie Gory, Moscow 119991, Russia
Alexander Shananin: Moscow Center for Fundamental and Applied Mathematics, Lomonosov Moscow State University, GSP-1, Leninskie Gory, Moscow 119991, Russia

Sustainability, 2023, vol. 15, issue 19, 1-21

Abstract: Input–output analysis finds widespread application in estimating the shock effects on production networks within both local and global economies. We are developing a new technology for intersectoral analysis that takes into account the substitution of production factors within a complex supply network triggered by external or internal shocks. This technology is based on the explicit solution of a pair of convex programming problems: the resource allocation problem under the assumption of Constant Elasticity of Substitution (CES) technologies and the special dual Young problem. Solving these problems, we can ascertain the equilibrium inputs and price indexes of goods within the production network. In this paper, we apply this technology to analyze the economy of Kazakhstan in the context of the COVID-19 pandemic. Our calculations provide us with the means to discuss the macroeconomic responses of the multi-sectoral production network in Kazakhstan to both external and internal shocks stemming from the pandemic.

Keywords: input–output analysis; CES production function; resource allocation problem; Young transform; competitive equilibrium; pandemic; economic shocks (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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