Linear Algebra and Economics

Steve Levandusky

Applications of Input-Output Analysis

             Input-output analysis is used in many different sectors of the economy to help estimate the need for goods in the future. It has been used to demonstrate the effects of a change to the domestic production and foreign trade. Also, it has been applied to disarmament to show its effects to the arms industry as well as the region of the arms industry. [2]

             By using input-output analysis, one is able to compare the environmental repercussions with the economic structure of a given region. For example, Leontief compares air pollution and the economic structure. [2]

             The structure of the world economy can even be shown in setting up an outline of a simple input-output. Also, it is able to illustrate the link between population growth and economic development. The link between the growth of maritime traffic and the future of world ports has been displayed using input-output analysis. [2]

             Input-output analysis has become a system for information  regarding policy decisions in modern economies. In the United States, it displays the interdependence of technological advances,  prices, wages, and rates of return of capital. By using input-output analysis, governments are able to make policies that will better help their nation and the world economies. [2]

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