The Leontief mannequin is a mathematical mannequin that economists use to investigate the interdependence of various sectors in an economic system. It’s primarily based on the concept that the output of 1 sector is used as enter for different sectors, and that the whole output of the economic system is set by the demand for closing items and providers.
The Leontief mannequin is necessary as a result of it permits economists to know how modifications in a single sector of the economic system can have an effect on different sectors. This info can be utilized to make coverage selections that promote financial progress and stability. For instance, the Leontief mannequin can be utilized to investigate the affect of commerce insurance policies, tax insurance policies, and authorities spending.
