Input–Output Methodology

This chapter discusses the input-output methodology. The input-output matrix shows the flows of intermediate inputs and outputs between the various sectors, while the aggregate matrix cancels these out to show the aggregate statistics of product, income, and expenditure and their subheads, without double-counting and without including more data than are necessary for the purpose.The input-output table, or inter-industry matrix, includes value items corresponding to flows of raw materials at all stages. One of the purposes of the aggregate approach is to limit the information presented to bare essentials, but the main purpose of the input-output approach is to analyze all intermediate, as well as final, flows. The pattern of these flows shows the relationship between the various sectors of the economy and their degree of interdependence. These two approaches are not alternatives but are complementary. It is important, in planning, that their complementarity be emphasized by the relevant statistical linkages between the two accounts or sets of accounts.