Munich Personal RePEc Archive

The Whole Economy Approach of the Input-Output Model

Liu, Fengquan (2015): The Whole Economy Approach of the Input-Output Model.

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Abstract

In macroeconomy research that uses technological table, most studies have only considered a special aspect. This paper develops an input-output model that extends to the whole economy by adding finance into transaction table. This forms a integrated capital flow cycling system for whole economy. Economic growth is used to reflect economic dynamic characteristics. Whole economy is divided into five subsystems. On the basis of subsystem's balance sheet, we set up the simultaneous equation of whole economy. As part of the disposal income, the new loan of the subsystems are affected by money supply badly and the income ratio is not stable. In this paper, expenditure ratio of subsystems is used to solve the simultaneous equation. The subsystem's balance sheets and the simultaneous equation can be applied to study fundamental economic issues effectively.

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