leontief inputoutput model (application of linear …：列昂惕夫投入产出模型（线性应用….pdf

1 Math 547 Research Project Minju Kim Leontief Input-Output Model (Application of Linear Algebra to Economics) Introduction Professor Wassily Leontief started input-output model with a question, “what level of output should each of the n industries in an economy produce, in order that it will just be sufficient to satisfy the total demand for that product?” Leontief Input- output analysis which was developed by Professor Wassily Leontief in the 1930’s is a method used to analyze the relationships between sectors in an economy. These sectors are interdependent on the other sectors in the economy. In order to produce something, each sector needs to consume of its own output and some of output from the other sectors. He developed the models to model economies using empirical data. He divided U.S. economy into 500 economic sectors and described the interdependence between sectors with input-output matrices. With input-output model, it became possible to determine the total output of industries that must be produced to obtain a given amount for final demand. By using the Leontief Input-output Model, it is possible to find production levels which will meet the demands of all sectors inside and outside of that economy. On October 18 in 1973, Wassily Leontief won Nobel Prize in