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A new approach for the input–output price model

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  • Sharify, Nooraddin
  • Sancho, Ferran

Abstract

This paper proposes a new approach to measure the impact of a sector's price shock on price indices. It works based on table adjustments to trace the effects of any initial price shock through an iteration process. It has the same accuracy and all the capabilities of the popular Standard Leontief Price (SLP) model. A distinct advantage of the new approach compared with the SLP model, however, is its ability to measure the impact of the initial price shock on all value-added components if and when it is required. This capability enables researchers to use interindustry price analysis to tackle problems of a more real-world nature. Other advantages of this approach are its simple computational implementation, especially relevant for larger size interindustry tables, the unified way to deal with all kind of different price issues, and the yielding of an adjusted interindustry table reflecting all endogenous price adjustments in response to the initial price shock.

Suggested Citation

  • Sharify, Nooraddin & Sancho, Ferran, 2011. "A new approach for the input–output price model," Economic Modelling, Elsevier, vol. 28(1), pages 188-195.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:1:p:188-195
    DOI: 10.1016/j.econmod.2010.09.012
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    References listed on IDEAS

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    1. Wassily Leontief, 1946. "Wages, Profit and Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 61(1), pages 26-39.
    2. Abbas Valadkhani & William F. Mitchell, 2002. "Assessing the Impact of Changes in Petroleum Prices on Inflation and Household Expenditures in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(2), pages 122-132, June.
    3. Leon N. Moses, 1974. "Outputs And Prices In Interindustry Models," Papers in Regional Science, Wiley Blackwell, vol. 32(1), pages 7-18, January.
    4. Gene K. Lee & Leroy L. Blakeslee & Walter R. Butcher, 1977. "Effects of Exogenous Price Changes on a Regional Economy: An Input-Output Analysis," International Regional Science Review, , vol. 2(1), pages 15-27, October.
    5. De MESNARD, Louis, 2007. "About the Ghosh model: clarifications," LEG - Document de travail - Economie 2007-06, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
    6. C. C. Greenfield & H. A. Fell, 1979. "The Estimation Of Price Effects In A Social Accounting Matrix," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(1), pages 65-81, March.
    7. Melvin, James R, 1979. "Short-Run Price Effects of the Corporate Income Tax and Implications for International Trade," American Economic Review, American Economic Association, vol. 69(5), pages 765-774, December.
    8. Fatemeh Bazzazan & Peter Batey, 2003. "The Development and Empirical Testing of Extended Input-Output Price Models," Economic Systems Research, Taylor & Francis Journals, vol. 15(1), pages 69-86, March.
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    Cited by:

    1. Wenlang Zhang & Gaofeng Han & Steven Chan, 2014. "How Strong are the Linkages between Real Estate and Other Sectors in China?," Working Papers 112014, Hong Kong Institute for Monetary Research.
    2. Sharify, Nooraddin, 2013. "Input–output modelling of the effect of implicit subsidies on general prices," Economic Modelling, Elsevier, vol. 33(C), pages 913-917.
    3. Michał Przybyliński & Artur Gorzałczyński, 2022. "Applying the input–output price model to identify inflation processes," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-11, December.
    4. Chan, Steven & Han, Gaofeng & Zhang, Wenlang, 2016. "How strong are the linkages between real estate and other sectors in China?," Research in International Business and Finance, Elsevier, vol. 36(C), pages 52-72.

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    More about this item

    Keywords

    Unified price model; Interindustry price analysis; Endogenous database adjustments;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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