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An operational, nonlinear input-output system
Economic Modelling (2014)
  • Ana-Isabel Guerra, Universidad de Granada
  • Ferran Sancho, Universitat Autonoma de Barcelona
We develop a scale-dependent nonlinear input-output model which is a practical alternative to the conventional linear counterpart. The model contemplates the possibility of different assumptions on returns to scale and is calibrated in a simple manner that closely resembles the usual technical coefficient calibration procedure. Multiplier calculations under this nonlinear version offer appropriate interval estimates that provide information on the effectiveness and variability of demand-driven induced changes in equilibrium magnitudes. In addition, and unlike linear multipliers, the nonlinear model allows us to distinguish between physical and cost effects, the reason being that the traditional dichotomy between the price and quantity equations of linear models no longer holds. At the computational level, the analysis proves the operational applicability of the nonlinear system while at the methodological level shows that scale effects are relevant in determining sectoral multipliers
Publication Date
August, 2014
Citation Information
Ana-Isabel Guerra and Ferran Sancho. "An operational, nonlinear input-output system" Economic Modelling Vol. 41 (2014)
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