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Adding Supply-Driven Consumption Makes The Ghosh Model Even More Implausible

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  • Jan Oosterhaven

Abstract

Guerra and Sancho (2011) argue that adding a supply-driven consumption function to the Ghosh model diminishes its implausibility in the case of centrally planned economies. Extending the Leontief model with a demand-driven consumption function does make that model more realistic. Extending the Ghosh model, however, makes it even more implausible in the case of a market economy, while it becomes even more problematic as a guide for a centrally planned economy. The prime reason is that complementarities between inputs are negated, not only for firms, but now also for households. Consequently, industry and aggregate output may now increase, while corresponding value added decreases, and vice versa.

Suggested Citation

  • Jan Oosterhaven, 2012. "Adding Supply-Driven Consumption Makes The Ghosh Model Even More Implausible," Economic Systems Research, Taylor & Francis Journals, vol. 24(1), pages 101-111, October.
    • Handle: RePEc:taf:ecsysr:v:24:y:2012:i:1:p:101-111
    DOI: 10.1080/09535314.2011.635137
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    1. William H. Miernyk, 1965. "The Elements of Input-Output Analysis," Wholbk, Regional Research Institute, West Virginia University, number 04, Fall.
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    Cited by:

    1. Juan C. Surís-Regueiro & José L. Santiago, 2016. "An Input-Output methodological proposal to quantifying socio economic impacts linked to supply shocks," Working Papers 1603, Universidade de Vigo, Departamento de Economía Aplicada.
    2. Fidel Aroche Reyes & Marco Antonio Marquez Mendoza, 2021. "Demand-Driven and Supply-Sided Input–Output Models," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(2), pages 251-267, June.
    3. Oosterhaven, Jan, 2017. "Key Sector Analysis," Research Report 17015-GEM, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    4. repec:dgr:rugsom:13017-gem is not listed on IDEAS
    5. Michiyuki Yagi & Shigemi Kagawa & Shunsuke Managi & Hidemichi Fujii & Dabo Guan, 2020. "Supply Constraint from Earthquakes in Japan in Input–Output Analysis," Risk Analysis, John Wiley & Sons, vol. 40(9), pages 1811-1830, September.
    6. Manresa, Antonio & Sancho, Ferran, 2013. "Supply and demand biases in linear interindustry models," Economic Modelling, Elsevier, vol. 33(C), pages 94-100.
    7. Maria Sassi, 2023. "Economic Connectiveness and Pro-Poor Growth in Sub-Saharan Africa: The Role of Agriculture," Sustainability, MDPI, vol. 15(3), pages 1-17, January.
    8. Maurizio Droli & Ting Fa Margherita Chang & Luca Iseppi & Livio Clemente Piccinini, 2014. "Managing Trade Contacts in HotRest Intermediate Markets: A Resource-Based View Analysis in EU Countries," Tourism Economics, , vol. 20(4), pages 757-778, August.
    9. Linn Svegrup & Jonas Johansson & Henrik Hassel, 2019. "Integration of Critical Infrastructure and Societal Consequence Models: Impact on Swedish Power System Mitigation Decisions," Risk Analysis, John Wiley & Sons, vol. 39(9), pages 1970-1996, September.
    10. Chen, Quanrun & Chen, Xikang & Pei, Jiansuo & Yang, Cuihong & Zhu, Kunfu, 2020. "Estimating domestic content in China’s exports: Accounting for a dual-trade regime," Economic Modelling, Elsevier, vol. 89(C), pages 43-54.
    11. Reinout Heijungs & Arjan Koning, 2019. "Analyzing the effects of the choice of model in the context of marginal changes in final demand," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-22, December.
    12. Oosterhaven, Jan, 2015. "On the doubtful usability of the inoperability IO model," Research Report 15008-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    13. Marquez, Marco, 2022. "Supply, demand and economic growth in Mexico in the period 1980–2016," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    14. Jan Oosterhaven & Michiya Nozaki, 2014. "The impact of production and infrastructure shocks to the Japanese inter-regional economy: A non-linear input-output programming approach," ERSA conference papers ersa14p163, European Regional Science Association.
    15. Oosterhaven, J. & Bouwmeester, M.C. & Nozaki, M., 2013. "The impact of production and infrastructure shocks," Research Report 13017-GEM, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    16. Aaron Praktiknjo, 2016. "The Value of Lost Load for Sectoral Load Shedding Measures: The German Case with 51 Sectors," Energies, MDPI, vol. 9(2), pages 1-17, February.
    17. Almeida, Lucas Milanez de Lima & Balanco, Paulo Antonio de Freitas, 2020. "Application of multivariate analysis as complementary instrument in studies about structural changes: An example of the multipliers in the US economy," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 189-207.
    18. Yagi, Michiyuki & Managi, Shunsuke, 2021. "Global supply constraints from the 2008 and COVID-19 crises," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 514-528.
    19. Michael Humavindu & Jesper Stage, 2013. "Key Sectors of the Namibian Economy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 2(1), pages 1-15, December.

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