The Optimal Improvement Of Direct Consumption Coefficients

Input-output method is an effective quantitative economics method to measure the relationship between various departments. In the1930s, Input-Output Economics was published by the famous American economists, Wassily Leontief, then input-output method was born. During the next more than half a century, the input-output method developed rapidly. It was widely used in nearly all aspects of the national economy, and has made many remarkable achievements.In the input-output models, direct consumption coefficient is the core parameter. In the classical input-output analysis, people often assume that the direct consumption coefficient is stable. But in our economic environment, the direct consumption coefficient will change according to the rapid development of science and technology. At the same time, final demand of the society has become the leading force to boost the economy. Many companies have to improve their skills because of the growing demand. So it is necessary to study the relationship between the direct consumption coefficient and the social demand. On the basis of summarizing predecessors’achievements, I discuss that when the social demand grow, how the direct consumption coefficient will change. The main content of this article focuses on chapter3and chapter4.Chapter3of this article is about theory. It is divided into four sections. In section3.1and section3.2, I assume that when the final demand grows, the total output does not change. On the aspects of absolute change and the relative change, I get the equations respectively and calculate the optimal expression of the direct consumption coefficient. Section3.3is an extension of the previous two sections. I discuss the problem on the hypothesis that the total output will change, and give the constraint equation at end of the section. Section3.4discusses the uncertainty in the problem. When the direct consumption coefficients subject to uniform distribution, the section gives the probability equation of the input-output model. Further, if there are only2variables and they are independent, the section gives the solution of the equations.Chapter4of this article is an example, aimed to test the theoretical results of chapter3. Based on2007input-output table data of six departments in Shandong province, I apply the theory to find the optimal improvement, and discuss the economic meaning of the results.