Input-Output Analysis

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DEFINITION of 'Input-Output Analysis'

Input-output analysis is an economics term that refers to the study of the effects that different sectors have on the economy as a whole, for a particular nation or region. This type of economic analysis was originally developed by Wassily Leontief (1905 – 1999), who later won the Nobel Memorial Prize in Economic Sciences for his work on this model. Input-output analysis allows the various relationships within an economic system to be analyzed as a whole, rather than individual components.

BREAKING DOWN 'Input-Output Analysis'

Input-output analysis seeks to explain how one industry sector affects others in the same nation or region. The analysis illustrates that the output of one sector can in turn become an input for another sector, which results in an interlinked economic system. The analysis is represented as a matrix, where different rows and columns are filled with values representing the inputs and outputs of various sectors.

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