Output Multiplier

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:

$O_{j} = \sum_{i} l_{ij}$