Input-Output Economics and Material Flows
Rensselaer Working Papers in Economics from Rensselaer Polytechnic Institute, Department of Economics
This paper argues that resources constitute the fundamental area of overlap between the interests of input-output economists and industrial ecologists. Three misconceptions about input-output economics obscure this fact: the frequent failure to utilize combined quantity and price input-output models, treatment of value-added as a monetary concept only, and the belief that all input-output models assume a linear relationship between output and final deliveries. The paper dispels these misconceptions by describing a quantity input-output model with resources measured in physical units and the corresponding price model with both resource prices and product prices. The model is illustrated with a numerical example of a hypothetical economy and analysis of a scenario where that economy is subsequently obliged to extract a lower grade of ore. Then three other input-output models are presented: a model closed for household consumption, a dynamic model, and a model of the world economy. Unlike the basic model, the last two are non-linear in final deliveries and in factor prices while also retaining the desirable features of the basic model.
JEL-codes: Q31 C67 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:rpi:rpiwpe:0424
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