Why Do We Develop a New “Output-Output Model”?

Recently, Gim and Kim presented the following research outcomes concerned with some problems of the IO model: (1) the general relation between two different notions of direct and indirect input requirements, (2) the decomposition by factors in the Leontief inverse (or output requirements matrix for final demand), and (3) the building of a new Output-Output (OO) model without having the overestimation and consecutive connection problems. While the IO model can be characterized as a system that relates final demand ? to gross output χ, the newly developed OO model relates gross output for final demand (endogenous or exogenous) χ to gross output for output (endogenous) o. The purpose of this paper is to introduce the concept of “output requirements for output” and develop a new open static output-output model in comparison to the IO model. The proposed OO model can be appropriately used for measuring the economic importance of a sector when gross (or total) output is accepted as an initial change. Consequently, our main concern and interest can be summarized as choosing the most suitable output and input requirements matrices, which exactly coincide with the specific purposes of research, among four different requirements matrices (Γ ? , Γ g , С ? , and C g ).