The Whole Economy Approach of the Input-Output Model

  • Fengquan LIU

Abstract

In macroeconomy research that uses technological table, most studies have only considered a special
aspect. This paper develops an input-output model that extends to the whole economy by adding finance into
transaction table. This forms an integrated capital flow cycling system for whole economy. Economic growth is
used to reflect economic dynamic characteristics. Whole economy is divided into five subsystems. On the basis
of subsystem's balance sheet, we set up the simultaneous equation of whole economy. As part of the disposal
income, the new loan of the subsystems is affected by money supply badly and the income ratio is not stable. In
this paper, expenditure ratio of subsystems is used to solve the simultaneous equation. The subsystem's
balance sheets and the simultaneous equation can be applied to study fundamental economic issues effectively.

References

[1] Fisher, I. (1916). Elementary Principles of Economics.Macmillan Co of Canada, p. 159.
[2] Santos J.R. (2012). An input-output framework for assessing disaster impacts on Nashville metropolitan region, submitted in Economic Systems Research.
[3] Leontief, W. (1970). Environmental repercussions and the economic structure:an input-output approach.TheReview of Economics and Statistics, 52(3): 262–271.
[4] Leontief, W. (1986). Input-output economics. Oxford University Press, p. 20.
[5] Mouhammed, A.H. (2000).Introductory Mathematical Economics. M.E. Sharpe, p.73.
[6] Mouhammed, A.H. (2002).Introductory Mathematical Economics. M.E. Sharpe, pp. 85-87.
[7] Peneder, M. (2002). Industrial structure and aggregate growth.WIFOWorking papers, No.182.
[8] Swenson, C.W, Moore, M.L. (1987). Use of inputoutput analysis in tax research. Taxation, a Research Annual, 1: 49-83.
[9] Taylor, J.B. (1993). Discretion versus policy rules in practice. In Carnegie-Rochester Conference series on public policy, 39: 195–214.
[10] Walras, L.(1954). Elements of Pure Economics or the Theory of Social Wealth. American Economic Association,Richard D. Irwin, inc, page 315.
*** Exchange rate dynamics & currency factors: Top 5 factors affecting exchange rates. OANDA, http:// fxtrade.oanda.ca/learn/top-5-factors-that-affect-exchange-rates
*** The Christian Science Monitor.(2011).The real cause of economic stagnation. See http://www.csmonitor.com/Business/The-Daily-Reckoning/2011/0921/The-real-cause-of-economic-stagnation
*** The Wall Street Journal. (2012). How Americans spend their money, http://online.wsj.com/news/ articles/SB10000872396390444358804578018823313863636
*** F.M.I. Strategy (2012). Relationship between the money supply and inflation, http://www. macro-investing-strategy.com/money-supply-and-inflation/
*** Office for National Statistics (2013).The headlines: Household expenditure at a glance, http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2013-edition/ sum-headlines.html
Published
2016-10-20
How to Cite
LIU, Fengquan. The Whole Economy Approach of the Input-Output Model. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 6, n. 1, p. 50-66, oct. 2016. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/255>. Date accessed: 22 jan. 2022.
Section
Theoretical and Practical Research in the Economic Fields

Keywords

macroeconomy, input-output model, balance sheet, economic mechanism, fundamental economic issues, economic simulation experiment