A Comparison Of Input-Output Models:Ghosh Reduces To Leontief (But ‘Closing’ Ghosh Makes It More Plausible)

• Authors: Ferran Sancho.
• BSE Working Paper: 110921 | September 15
• Keywords: multi-sectoral input-output models , Market Economy , Planned Economy
• JEL codes: C63, C67, P2
• multi-sectoral input-output models
• Market Economy
• Planned Economy

Ghosh’s model is discussed in this paper under two alternative scenarios. In an open version we compare it with Leontief’s model and prove that they reduce to each other under some specific productive conditions. We then move onto reconsidering Ghosh’s model alleged implausibility and we do so reformulating the model to incorporate a closure rule. The closure solves, to some extent, the implausibility problem very clearly put out by Oosterhaven for then value-added is correctly computed and responsive to allocation changes resulting from supply shocks.