Alternate input output matrix updating formulations

Commodity prices are determined in a similar fashion.In the factor income block, econometric behavioral equations predict each value-added component (including compensation, profits, interest, rent, and indirect taxes) by industry.Second, parameters in the behavioral equations differ among products, reflecting differences in, for instance, consumer preferences, price elasticities in foreign trade, and industrial structure.

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The model allows us to examine how alternative microeconomic conditions or policies will affect other aspects of the economy.Therefore, model solutions are not static, but instead they project a time path for the endogenous quantities.The LIFT model thus simulates the economy year-by-year, allowing analysts to examine both the ultimate economic impacts of projected energy or environmental policies and the dynamics of the economy's adjustment process over time.In the supply block, these detailed demand predictions then are used in an input-output production identity to calculate real gross output: where q and f are vectors of output and final demand by commodity, respectively, each having 110 elements, and where A is a 110x110 matrix of input-output coefficients.Input-output coefficients and the bridge matrix coefficients vary over time according to historical trends evident in available data and, in some cases, using assumptions about how technology and tastes might develop in the future (Almon 2008).