Input-Output Analysis

Discipline: Economics

The Russian-born American economist Wassily Leontief (1906-1999) used matrix algebra and subsequently computer technology to trace the relationship between industries of the US economy.

Every output in an economy can be analyzed in terms of final consumption and all the inputs necessary for its production.

By developing a matrix of various production functions, it is possible to track the knock-on effect of a change in demand for a given good or service on other industries or sectors. Lower automobile sales might mean a decline in steel demand, a fall in electricity or a drop in coal imports.

W W Leontief, The Structure of the American Economy, 1919-29 (New York, 1941)


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