Input-Output Modelling

Stone made a substantial contribution to input-output analysis beginning in 1951 (see Marangoni and Rossignoli 2014). The input-output approach had been pioneered by Leontief over a decade earlier. The CGP developed and extended the input-output representation of industrial structure in two ways, both of which were adopted in subsequent literature and in practice. First, commodities were distinguished from industries to allow each industrial group to produce a number of products or commodities. This is important for integrating the input-output tables and the national accounts because it makes the institutional accounts more logical and transparent. Industries produce not only their own characteristic products but also the products of other industries and this can be represented in the accounts. This treatment is later followed in the UN’s revised SNA published in 1968. Second, the ‘RAS’ method (see Bacharach 1970) was developed to extrapolate input-output tables when data on inter-industry flows were not available, but row and column totals of the flows could be calculated from national accounting data. This method has proved to be very useful and has been adopted extensively as a means of updating input-output tables ever since.