Difference between revisions of "Output Multiplier"
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== 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: | + | 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 the column sum: |
:<math> | :<math> |
Revision as of 12:42, 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 Coefficient 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 () as , then the output multiplier is defined as the column sum: