The Leontief mannequin is a mathematical mannequin that economists use to research the interdependence of various sectors in an economic system. It’s primarily based on the concept the output of 1 sector is used as enter for different sectors, and that the entire output of the economic system is decided by the demand for closing items and providers.
The Leontief mannequin is vital as a result of it permits economists to grasp 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 choices that promote financial development and stability. For instance, the Leontief mannequin can be utilized to research the influence of commerce insurance policies, tax insurance policies, and authorities spending.
