Input-Output Analysis and Interrelational Income Multiplier as a Matrix

Abstract

As an extension of the input-output analysis, we have introduced in the previous chapter a new concept which might be called the “interrnational income multiplier” in matrix form. It was designed to analyse the interrelationships among various income-groups in the process of income formation, and in this respect it tells us how much of one group’s income is generated by another group’s expenditure from one unit of additional income via the medium of industrial production activity. Although this multi-sector multiplier follows from Leontief’s “interindustry matrix multiplier”, it is formulated by the inclusion of the income generation process, which is omitted in the standard input-output open model, and by projecting the multiplier process into the income-determination side rather than the output-determination side.

This is a slightly revised version of the empirical application part of article which was originally published, under the same title, in Hitotsubashi Journal of Economics, Vol. 8 No. 2, Feb. 1968.