Difference between revisions of "Output Multiplier"
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== Definition == | == Definition == | ||
| − | An '''Output-to-Output Multiplier''' indicates how total production will change as final demand is changed in any one sector of the economy. | + | An '''Output-to-Output Multiplier''' indicates how total production will change as final demand is changed in any one sector of the economy. The output multiplier for sector j is the sum of column j of the [[Technical Coefficients Matrix]]. This output multiplier measures the amount of output generated by a $1 change in final demand for the output of the jth sector. |
== Formula == | == Formula == | ||
| − | + | If we represent the elements of the [Leontief Inverse Matrix]] <math>(I-A)^{-1}</math< as <math>{l_{ij}</math>, then the output multiplier is defined as: | |
| + | |||
| + | :<math> | ||
| + | O_{j} = \sum_{i} l_{ij} | ||
| + | </math> | ||
| + | |||
Revision as of 12:33, 7 March 2022
Definition
An Output-to-Output Multiplier indicates how total production will change as final demand is changed in any one sector of the economy. The output multiplier for sector j is the sum of column j of the Technical Coefficients Matrix. This output multiplier measures the amount of output generated by a $1 change in final demand for the output of the jth sector.
Formula
If we represent the elements of the [Leontief Inverse Matrix]] Failed to parse (syntax error): (I-A)^{-1}</math< as <math>{l_{ij} , then the output multiplier is defined as:
