Solutions of the dynamic input-output model: a critical review

Abstract

The main purpose of this paper is to provide a critical review of the alternative solutions of the dynamic Input-Output model; the advantages and disadvantages of each one; and to present a modified model based on an econometric approach. The discussion of the alternative solutions indicates that the use of the forward-in-time-integration approach is necessary since it is based on initial (actual) information. The problem with the backward-in-time-integration approach is that it does not prevent the determination of initial (actual) year output level and it is likely to result in inconsistent projections. On the other hand, the main problem of the modified model is data collection, which restricts its use in applied analysis.