Let the following data for a 2 industry economy 1 200 175 660 165 1200 1...

    

Transcribed Image Text:

Let the following data for a 2 industry economy 1 200 175 660 165 1200 1 2 Households Other payments Total spending 2 450 150 800 200 1600 Households 200 600 75 860 1735 coefficients Ao 2x2 other final demand 350 675 200 400 1625 Industry output 1200 1600 1735 1625 6160 Assume first that the household sector is included in the exogenous final demand, ie initially the exogenous final demand is given by the sum of the household and other final demand column. a) Construct the matrix of interindustry transactions Zo and the corresponding matrix of technical 2x2 b) Assume now that the other final demand for industry 2 output increases by 20 percent. What is the change in industry 1 output that is required to meet this increased final demand for industry 2 output? Assume now that we close this model with respect to households, ie that households are no longer considered as being included in the exogenous final demand. c) Construct the matrix of interindustry transacions Z and the matrix of technical coefficients A 3x3 3x3 associated with this model closed with respect to households. d) Assume now that the other final demand for industry 2 output increases by 20 percent. What is the change in industry 1 output that is required to meet this increased final demand for industry 2 output, considering that households now respond endogenously to the change in final demand? e) Is your finding in d) different from that obtained in b)? How do you explain this result, considering that the change in final demand is exactly the same in the 2 questions? f) Calculate the new matrix of interindustry transactions that result from the change in final demand for industry 2 output described in d). By how much has labour income increased in industry 1 following the change in final demand? g) Let matrix P representing the share of industry labour income (including the household sector) that accrues to each of the 4 broad categories of workers of this economy P = [0.25 0.3 0 0.35 0.25 0.1 0.15 0.20 0.5 0.25 0.25 0.4 Identify the labour income received by each category of worker in each industry, following the change in final demand described ind). For example, how much labour income workers of category 1 receive from industry 1, how much they receive from industry 2, and how much they receive from households. Let the following data for a 2 industry economy 1 200 175 660 165 1200 1 2 Households Other payments Total spending 2 450 150 800 200 1600 Households 200 600 75 860 1735 coefficients Ao 2x2 other final demand 350 675 200 400 1625 Industry output 1200 1600 1735 1625 6160 Assume first that the household sector is included in the exogenous final demand, ie initially the exogenous final demand is given by the sum of the household and other final demand column. a) Construct the matrix of interindustry transactions Zo and the corresponding matrix of technical 2x2 b) Assume now that the other final demand for industry 2 output increases by 20 percent. What is the change in industry 1 output that is required to meet this increased final demand for industry 2 output? Assume now that we close this model with respect to households, ie that households are no longer considered as being included in the exogenous final demand. c) Construct the matrix of interindustry transacions Z and the matrix of technical coefficients A 3x3 3x3 associated with this model closed with respect to households. d) Assume now that the other final demand for industry 2 output increases by 20 percent. What is the change in industry 1 output that is required to meet this increased final demand for industry 2 output, considering that households now respond endogenously to the change in final demand? e) Is your finding in d) different from that obtained in b)? How do you explain this result, considering that the change in final demand is exactly the same in the 2 questions? f) Calculate the new matrix of interindustry transactions that result from the change in final demand for industry 2 output described in d). By how much has labour income increased in industry 1 following the change in final demand? g) Let matrix P representing the share of industry labour income (including the household sector) that accrues to each of the 4 broad categories of workers of this economy P = [0.25 0.3 0 0.35 0.25 0.1 0.15 0.20 0.5 0.25 0.25 0.4 Identify the labour income received by each category of worker in each industry, following the change in final demand described ind). For example, how much labour income workers of category 1 receive from industry 1, how much they receive from industry 2, and how much they receive from households.

Answer rating: 100% (QA)

InterIndustry Analysis for a 2Industry Economy Part a Initial Model with Households in Exogenous Final Demand 1 Matrix of Interindustry Transactions Z... View the full answer