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Barcelona GSE Working Paper No. 580

Title: A Non-Possibility Theorem for Joint- Stability in Interindustry Models
Authors: Ana-Isabel Guerra, Ferran Sancho
Date: 29-09-2011
Keywords: Interindustry modeling, joint-stability, demand-driven, supply-driven
JEL Codes: C62, C67, O21
Abstract:
Joint-stability in inter-industry models relates to the mutual simultaneous consistency of the demand-driven and supply-driven models of Leontief and Ghosh, respectively. Previous work has claimed joint-stability to be an acceptable assumption from the empirical viewpoint, provided only small changes in exogenous variables are considered. We show in this note, however, that the issue has deeper theoretical roots and offer an analytical demonstration that shows the impossibility of consistency between demand-driven and supply-driven models.
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