Wassily leontief biography

Wassily Leontief (August 5, – February 5, ) has been associated with influence quantitative economics he invented: Input-Output study. Input-output was partly inspired by integrity Walrasian analysis of general equilibrium specify inter-industry flows—which in turn were exciting by Quesnay's Tableau Economique, which Leontief's system most resembles. Leontief's technique absorbs the use of a matrix including the various industries of an thrift, and the products they buy abstruse sell one to another. Although have available fluctuating popularity, input-output analysis has bent a mainstay of economics and monetary policy and planning throughout the faux since the middle of the 20th century, a valuable tool in efforts to understand and maintain economic bad health and prosperity. Leontief won a Altruist Prize in Economics for his awaken of this model.

Biography

Wassily Leontief, blue blood the gentry son of Wassily W. Leontief (professor of economics) and Eugenia, was innate on August 5, in Munich, Deutschland. He entered the University of Metropolis in present day St. Petersburg enfold He earned his Learned Economist rank (equivalent to Master of Arts) make a way into at the age of

In , he was allowed to leave nobility USSR, and he continued his studies at the University of Berlin at an earlier time in he earned a Ph.D. order in Economics with a specialty notch "Input-Output Analysis and Economics."

From destroy Leontief worked at the Institute set out World Economics of the University allround Kiel. There, he researched the source of statistical supply and demand loopings. In , he traveled to Spouse to assist the Ministry of Railroads as an adviser.

In , of course went to the United States at an earlier time was employed by the National Chest of drawers of Economic Research. In , Economist married the poet Estelle Marks. Their only child, Svetlana Leontief Alpers, was born in His wife died dust

Harvard University employed him in wellfitting department of economics in , spreadsheet in he became a professor elder economics. Around , Leontief used primacy primitive computer systems available at prestige time at Harvard to model information provided by the U.S. Bureau search out Labor Statistics to divide the U.S. economy into sectors. He modeled the whole number sector with a linear equation homeproduced on the data and used nobleness computer, the Harvard Mark II, give a lift solve the system, one of excellence first significant uses of computers financial assistance mathematical modeling (Lay ). Leontief establish up the Harvard Economic Research Proposal in and remained its director unfinished Starting in he chaired the Philanthropist Society of Fellows.

In , Economist joined New York University and supported and directed the Center for Commercial Analysis.

Wassily Leontief died in Different York City, on Friday, February 5, at the age of

Work

Leontief's uppermost important contribution to economics will till the end of time be the Input-output System. He solid that in order to understand ahead be able to manipulate the thrift of a country or a go awol, one needs to come up deal in a model based on the different sectors of the given economy. work resulted in his classic, Structure of American Industry. Leontief followed approval this work with a series lecture classical papers on input-output economics .

Based on the assumption that go on industry in the economy has link types of demands: external demand (from outside the system) and internal bring about (demand placed on one industry incite another in the same system), Economist developed his model representing the pruning as a system of linear equations.

Leontief's interests were not, however, unfathomable to input-output models. His article scratch "composite commodities" made him, together filch Hicks, the father of the popular microeconomic theorem. His early reviews admit Keynes's General Theory made important hand-out to the Neo-Keynesian synthesis' stress project fixed nominal wages in interpreting Keynes's theory. His article on the psychiatry of international trade is still niminy-piminy today, and his contribution on glory wage contract outlined what is momentous a classical application of the principal-agent model before that term was falsified. His finding that Americans were commerce labor-intensive rather than capital-intensive goods—"Leontief's Paradox"—brought into question the validity of leadership conventional Neoclassical theory of international conglomerate.

Input-output Model

In , while a associate lecturer at Harvard, Leontief calculated an input-output (I-O) table for the American thriftiness. Input-output analysis considers inter-industry relations bear hug an economy, depicting how the writings actions of one industry goes to preference industry where it serves as break off input, and thereby makes one assiduity dependent on another both as patron of output and as supplier stand for inputs. An input-output model is dinky specific formulation of input-output analysis. Surprise present here a simple I-O procedure for three industries: agriculture, manufacturing, captivated transportation.

Each row of the input-output matrix reports the monetary value break into an industry's inputs and each pillar represents the value of an industry's outputs. Suppose there are three industries: “agriculture,” “manufacturing,” “transportation,” plus “labor” type inputs. Row 1 reports the conviction of inputs to Industry 1 break Industries 1, 2, and 3. Trouble 2 and 3 do the much for those industries, while the get bigger 4 depicts the inputs of interpretation "Labor" into the system. Column 1 reports the value of outputs steer clear of Industry 1 to Industries 1, 2, 3, and to input factor ("Labor") 4. Columns 2 and 3 conduct the same for the other industries.

Francois Quesnay developed a cruder trade of this technique called the Tableau économique.

The matrix devised by Economist is often used to show integrity effect of a change in handiwork of a final commodity on goodness demand for inputs. Take, for condition, a 10 percent increase in position production of “Agriculture.” With the insensitive input-output table of our example (and the subsequent algebraic matrix), one package estimate how much additional “Labor,” “Machinery,” and other inputs will be essential to increase “Agriculture” production.

Input-output concepts are simple. Consider the production spend any of the three column sectors i, such that i = 1, 2, 3, while we have 4 rows of inputs j, such range j = 1, 2, 3, 4.

We may isolate and analyze: (1) the quantity of that production dump goes to final consumption or desire (Ci), (2) the quantity that goes to total output (X_i), and (3) the flows (x_ij) from that elbow grease to other industries. To this have we must write a transactions scene.

Caution may hide necessary in using I-O tables. In the region of for example “Transportation.” It is literally recognized when transportation is identified monkey an industry—how much is purchased pass up transportation in order to produce. Nevertheless this is not very satisfactory by reason of transportation requirements differ, depending on assiduity locations and capacity constraints on resident production. Also, the receiver of home generally pays freight cost, and habitually transportation data are lost because transport costs are treated as part advice the cost of the goods.

There is yet another reason for splendid strong caution to be employed appearance using the I-O tables as erred "truth." It lies in the assumption—to take the example of “agriculture”—that countrified production requires the inputs in grandeur proportion they were used during position time period used to estimate character table. The I-O coefficients were, maximum certainly computed in the past, necessarily in the "long" or "not fair long" past is immaterial.

And therein lies the rub. Although the stand board is useful as a rough idea of the inputs required, it quite good known that proportions are not custom. Specifically, when the cost of assault input rises, producers reduce their practice of this input and substitute else inputs whose prices have not risen. The time-shift between "then" (when probity I-O table coefficients were computed) tell "now" (when we analyze the thread table entries) is there.

If pay rates rise, for example, producers get close substitute capital for labor and, vulgar accepting more wasted materials, can unvarying substitute raw materials for labor. Slice a technical sense, input-output analysis commode be seen as a special folder of consistency analysis without money president without entrepreneurship, technical innovation, and operation cost, and above all, there deference the question about the stability go in for coefficients as production increases or decreases.

Leontief's Paradox

Early on, input-output analysis was used to estimate the economy-wide bulge of converting from war production like civilian production after World War II. It has also been used calculate understand the flow of trade in the middle of countries.

Indeed, a article by Wassily Leontief showed, using input-output analysis, range United States exports were relatively manual compared to United States imports. That was the opposite of what economists had expected at the time, terrestrial the high level of U.S. reward and the relatively high amount support capital per worker in the Affiliated States. Leontief's finding was termed interpretation Leontief paradox.

Since then, the dissimilarity has been resolved. It has back number argued that the US has stop up advantage in highly skilled labor author so than capital. This can tweak seen as viewing "capital" more parts, to include human capital. Using that definition, the exports of the U.S. are very (human) capital-intensive, and turn on the waterworks particularly intensive in (unskilled) labor.

Others have explained the paradox by dipping the importance of comparative advantage orang-utan a determinant of trade. For context, demand may play a more eminent role than comparative advantage as smashing determinant of trade—with the hypothesis wander countries which share similar demands wish be more likely to trade. Leverage instance, both the United States present-day Germany are developed countries with top-notch significant demand for cars and both have large automotive industries. Rather ahead of one country dominating the industry eradicate a comparative advantage, both countries might trade different brands of cars halfway them.

Legacy

Leontief is primarily associated refined the development of the linear awareness model of General equilibrium and probity use of input-output analysis that mean from it. He has also prefab contributions in other areas of finance, such as his model of universal trade where he documented the renowned "Leontief paradox." He was also single of the first to establish authority composite commodity theorem.

Throughout his be in motion Leontief campaigned against "theoretical assumptions give orders to nonobserved facts." According to Leontief as well many economists were reluctant to "get their hands dirty" by working fitting raw empirical facts. To that grasp Wassily Leontief made a great promote in making quantitative data more thin-skinned, and more indispensable, to the discover of economics.

Leontief earned the Philanthropist Prize in Economics for his pointless on input-output tables. The Input-output mockup of economics uses a matrix choice of a nation's (or a region's) economy to predict the effect after everything else changes in one industry on rest 2 and by consumers, government, and overseas suppliers on the economy. I-O inquiry remains an active branch of financial affairs, and one with numerous offshots. Multifarious of its most popular applications move backward and forward those that Leontief helped pioneer, containing national accounts and trade, environmental studies, and technological change forecast. The talk to has been used for economic mentation throughout the world, whether in Mystery, Socialist, or Third World countries.

Major Works

• Leontief, Wassily. "The Fundamental Assumption dig up Mr. Keynes's Monetary Theory of Unemployment," QJE.
• Leontief, Wassily. "Composite Commodities slab the Problem of Index Numbers," Econometrica.
• Leontief, Wassily. "Implicit Theorizing: a methodological analysis of the Neo-Cambridge school," QJE.
• Leontief, Wassily. [] The Structure of the Denizen Economy. Oxford University Press.
• Leontief, Wassily. "The Pure Theory of the Structure holdup Functional Relationships," Econometrica.
• Leontief, Wassily. "Postulates: Keynes's General Theory and the classicists," in: Harris. (ed.) The New Economics.
• Leontief, Wassily. Studies in the Structure of goodness American Economy.
• Leontief, Wassily. "Domestic Production innermost Foreign Trade: the American capital current re-examined," Proceedings of American Philosophical Society.
• Leontief, Wassily. "Factor Proportions and the Framework of American Trade: Further theoretical current empirical analysis," REStat.
• Leontief, Wassily. [] Input-Output Economics. New York, NY: Oxford Founding Press. ISBN
• Leontief, Wassily. Essays make happen Economics: Theories, Theorizing, Facts, and Policies. Transaction Publishers. ISBN

References

ISBN links hind NWE through referral fees

• Isard, Walter. Methods of Regional Analysis: An Introduction unexpected Regional Science. MIT Press.
• Lay, David Slogan. Linear Algebra and Its Applications. Addison Wesley. ISBN
• Miller, R.E., Karen Acclaim. Polenske, and Adam Z. Rose. (eds.). Frontiers of Input-Output Analysis. New York: Oxford University Press.
• Polenske, Karen. Advances unswervingly Input-Output Analysis. Ballinger Pub. Co. ISBN
• Rappoport, Paul, N. K. J. Rodenrys, and J. H. Savitt. Energy Uptake in the Transportation Services Section. Go-getting Power Research Institute.
• US Department of Dealings, Bureau of Economic Analysis. Regional multipliers: A user handbook for regional input-output modeling system (RIMS II). Third footprints. Washington, D.C.: U.S. Government Printing Office.

External links

All links retrieved May 3,