Rethinking Input-Output Analysis by Jan Oosterhaven

Author:Jan Oosterhaven
Language: eng
Format: epub
ISBN: 9783030334475
Publisher: Springer International Publishing

(5.7)

Finally, a new, third behavioural equation with fixed primary input coefficients, , is needed to explain the remaining primary inputs of industry j in region s, :

(5.8)

Note that the remaining primary inputs do not have a feedback effect on industry output in the quantity model (see the lacking outgoing arrows within the upper part of Fig. 5.2). The middle part of (5.8) clarifies that the remaining primary inputs per regional industry, , equal the difference between total primary inputs, , and endogenous consumption of local households that is paid from their labour incomes by regional industry, , as explained in Sect. 4. In the Type II quantity model, the latter wage-related part of total primary inputs does have a feedback on total output by regional industry, as shown by the arrow with in Fig. 5.2.

The solution of the Type II quantity model for the remaining primary inputs and for any other impact variable, such as employment or CO2 emissions, is derived by substituting (5.7) into (5.6), moving the terms with endogenous total output from its RHS to its LHS, pre-multiplying the result with the Type II interregional Leontief-inverse and substituting the result into the first term of (5.8). This gives:

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