A supply-driven model consuming simultaneously all primary inputs: unfolding analytical potential beyond the Ghosh model

The Ghosh model fails to endogenise the simultaneous consumption of primary inputs and, consequently, is unused. It is argued that this limitation stems from being specified mirroring the Leontief model. In particular, primary inputs are considered homogeneous and independent despite being heterogeneous and (intersectorally) dependent. A new supply-driven model endogenising the consumption of all primary inputs except the one driving the model is developed. It displays new features: structural linearity and structural variability. An input multiplier analysis illustrates that the new model's total requirements matrix represents the actual structure of the economy, overcoming the Ghosh model's ‘limitation’. Also, it is exemplified how to use complementary information from the Ghosh model to deepen structural analyses. Thus, this paper solves a long-lasting theoretical inconsistency in IO modelling and unfolds new analytical potential, hopefully rekindling the interest in supply-driven analyses.