Leontief Inverse Matrix

Leontief Inverse Matrix

The Leontief Inverse Matrix shows the coefficients (economic multipliers) that measure the successive effects on the economy as a result of the initial increase in production of an economic activity branch. In other words, if an increase in production initially requires higher demand for intermediate consumption in order for it to be carried out, the intermediate consumption is in turn produced by other branches through the use of new intermediate consumption, and so on. This is what is known as the spillover effect which arises between the various activity branches of an economy

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