A non-possibility theorem for joint stability in interindustry models

Ana Isabel Guerra, Ferran Sancho

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

Joint-stability in interindustry modeling relates to the mutual simultaneous consistency of the demand-driven and supply-driven models of Leontief and Ghosh, respectively. Previous work has claimed joint-stability to be an acceptable assumption from the empirical viewpoint, provided only small changes in exogenous variables are considered. We show in this note, however, that the issue has deeper theoretical roots, offering a mathematical demonstration that shows the impossibility of mutual consistency between demand-driven and supply-driven models. Mutual consistency would entail that coefficient matrices under both model versions would remain constant when the economic equilibrium changes following an external shock. © 2012 Elsevier Inc. All rights reserved.
Original languageEnglish
Pages (from-to)4045-4048
JournalApplied Mathematics and Computation
Volume219
Issue number8
DOIs
Publication statusPublished - 15 Dec 2012

Keywords

  • Demand-driven
  • Interindustry modeling
  • Joint-stability
  • Supply-driven

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