HCBE Faculty Articles

Economic Interdependence and Input-Output Theory

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The objective of this paper is to summarize the historical evolution of the concept of economic interdependence within the general frame of reference of the input-output model. Modern macroeconomic thought has been profoundly influenced by two general equilibrium systems, the Keynesian one and the Input-Output model developed by Leontief. Although Keynes´ New School is considered an alternative to the Classical one, his approach is based on classical and neoclassical works. The first explanations of economic interdependence were examined by François Quesnay´s Tableau Économique, published in 1758. The recognition of Quesnay as pioneer of inter-industrial analysis was made by whom many years later became one of the greatest modern exponents of this type of analysis: Wassily W. Leontief. In his book The Structure of the American Economy. Leontief wrote that the statistical study presented in his Introduction to Part I could be better defined as an attempt to produce a “Tableau Économique” of the United States for 1919 and 1929. Leontief´s input-output model was originally intended to functionalize Léon Walras´ general equilibrium and interdependence model. That is why Leontief defined Input-output as an adaptation Neoclassical theory of general equilibrium to the empirical study of the quantitative interdependence among interrelated economic activities.





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