© 2000 John Petroff
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© 2000 John Petroff |
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Input-output tables are matrixes of coefficients showing how each and every sector of the economy relates to each other. The sectors naturally include industrial sectors, but also a government sector and a private consumer sector. The US Department of Commerce has published tables with as many as 370 sectors. What the approach allows to do, that no other approach does, is to study how known conditions in one or a number of sectors will affect other sectors and the entire economy. Think of the consequences of an unexpected shortage in a given raw material (e.g. petrol); it should not be too difficult to determine its impact on one industry, say ground freight carriers (see analysis example of impact on industry in Chapter 14 Section E). But one industry, freight carriers, affects many others: manufacturing, wholesale and retail trade, and so on. Measuring the sequence of ripple effects from one sector to the next becomes hugely complex, let alone finding the combine effect on gross domestic output and disposable income. Such simulation is very straight forward with input-output tables. One must realize that constructing and maintaining such a matrix is a mammoth task that can only be tackled by a government or by large conglomerates. Input-output tables have been the major planning tool of socialist countries, but they are not used as much in Western countries.
See review questions Q-15C2.1 through Q-15C2.4.
See research assignments R-15C2.1.
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