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A sensitivity analysis in a nonlinear Leontief model

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Conclusion

We have shown that in a nonlinear Leontief model where non-decreasing returns are allowed for, if some elements of the final demand vector are increased, then each activity level (i. e., gross output) goes up or remain unchanged and the maximum rate of increase in activity levels must be realized among those sectors for which the final demand is raised. It is also shown that this maximum rate of increase in activity levels is not greater than the maximum rate of increase in the final demands.

It should be noted that we do not require the indecomposability ofA (x). WhenA (x) is indecomposable, the final demand vector can be allowed to be non-zero nonnegative, and we can derive a set of propositions similar to those presented in this article.

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References

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Author notes

  1. Takao Fujimoto

    Present address: Department of Economics, University of Kagawa, Takamatsu, 760, Kagawa, Japan

  2. Carmen Herrero

    Present address: Department of Mathematics, University of Alicante, Alicante, Spain

  3. Antonio Villar

    Present address: Department of Economic Theory, University of Alicante, Alicante, Spain

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    1. Takao Fujimoto
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    2. Carmen Herrero
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    3. Antonio Villar
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    Fujimoto, T., Herrero, C. & Villar, A. A sensitivity analysis in a nonlinear Leontief model. Zeitschr. f. Nationalökonomie 45, 67–71 (1985). https://doi.org/10.1007/BF01283155

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    • DOI: https://doi.org/10.1007/BF01283155

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