Leontief, Wassily

Gilibert, G. (1998) Leontief, Wassily , in H.D. Kurz and N. Salvadori (eds) The Elgar Companion to Classical Economics, Cheltenham Edward Elgar, pp. 40-5. 

The input-output (10) analysis model was invented by Wassily Leontief who was awarded the Nobel Prize in 1973. The 10 model is a general equilibrium model of an economy showing the extent to which each sector uses inputs from the other sectors to produce its output, and thus showing how much each sector sells to each other sector. The lO model shows the increase in economic activity in every other sector that would be required to increase the net production of a sector by, for example, 1 million. In the case of 1 million worth of paint required for corrosion prevention, the 10 model would show the total activity in all sectors would amount to the 1 million worth of paint. The lO matrix was constructed by the U.S. Department of Commerce on the basis of the census of manufacturers in 1973 and represents the actual structure of the U.S. economy at that time. The 10 model has been very invaluable for planning. The 10 framework has also been useful in estimating the total economic activity that will result from net additional purchases from a sector and the total economic loss because of closure of an industry. 

Wassily Leontief, a Nobel laureate in economics, pioneered the use of production functions where the ratios of inputs to outputs were fixed so there was no substitution between inputs. This type of production has been used extensively in short-term business forecasting and production planning. 

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