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A Non-Possibility Theorem for Joint- Stability in Interindustry Models

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  • Ana-Isabel Guerra
  • Ferran Sancho

Abstract

Joint-stability in inter-industry models relates to the mutual simultaneous consistency of the demand-driven and supply-driven models of Leontief and Ghosh, respectively. Previous work has claimed joint-stability to be an acceptable assumption from the empirical viewpoint, provided only small changes in exogenous variables are considered. We show in this note, however, that the issue has deeper theoretical roots and offer an analytical demonstration that shows the impossibility of consistency between demand-driven and supply-driven models.

Suggested Citation

  • Ana-Isabel Guerra & Ferran Sancho, 2011. "A Non-Possibility Theorem for Joint- Stability in Interindustry Models," Working Papers 580, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:580
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    File URL: https://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/580.pdf
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    Cited by:

    1. Ana-Isabel Guerra & Ferran Sancho, 2013. "A Linear Price Model With Extractions," EcoMod2013 5113, EcoMod.
    2. Manresa, Antonio & Sancho, Ferran, 2013. "Supply and demand biases in linear interindustry models," Economic Modelling, Elsevier, vol. 33(C), pages 94-100.

    More about this item

    Keywords

    Interindustry modeling; joint-stability; demand-driven; supply-driven;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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