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The Leontief Input Output Model and the Linear Algebra Behind It


Presentation author(s)

Samantha Faruzzi ’21, Mundelein, Illinois

Major: Mathematics
Minor: Physics

Abstract

We will explore the Mathematics behind the infamous Leontief Input Output Model, most commonly used in Economics. The model, or the production equation, is given as x = Cx + d or (I-C)x = d, where x is the amount produced, C is the consumption matrix among the producers in an economy, Cx is the intermediate demand or demand from producers, and d is final demand or output demand.

While focusing on a small scale economy, we will see how this can be applied to a more realistic large scale economy to determine its required inputs for the two types of outputs, the intermediate demand and the final demand.

Sponsor

Ben Stucky

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