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Analysis and Development of Price Models in the System MEANS of Intersectoral Balance

Published in Economics (Volume 10, Issue 4)
Received: 24 October 2021     Accepted: 18 November 2021     Published: 27 November 2021
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Abstract

At present, monetary models of equilibrium prices have received a very wide and varied application. In this paper it is proved that the application of the currently existing monetary models of the intersectoral balance is associated with significant methodical errors. It is shown that price models based on the input balance provides such a balance only in unreal cases when the prices of all sectors are the same. For realistic conditions, when these requirements are not met, errors for these models reach unacceptable values. This article proposes and thoroughly investigated new price models based on output balances which do not have the said drawbacks. It is mathematically proven that the new models satisfy the output balances and do not have methodical errors. When used, they provide zero output imbalances for both theoretical and realistic data packets. Also in the paper the calculation results are presented both for the existing monetary models of input-output balance and for new price models using a wide set of initial data. The calculations performed confirm the theoretical conclusions of the article. It is also proved that the Leontief price model is a special case of the generalized model of price indices proposed in the work.

Published in Economics (Volume 10, Issue 4)
DOI 10.11648/j.eco.20211004.13
Page(s) 125-138
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Price Model, Leontief Model, Generalized Price Indices Model, Input Balance, Output Balance, Error

References
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[2] Ghosh A., (1958), Input-Output Approach to an Allocation System, Economica, 25, 58-64.
[3] Flaaen A., Pierce J., (2019), Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector, Finance and Economics Discussion Series 2019-086. Washington: Board of Governors of the Federal Reserve System, available at: https://doi.org/10.17016/FEDS.2019.086.
[4] Mukaramah Harun, Wan Fadzim, Shazida Ian, Mohd Khan, (2018), The effects of fuel subsidy removal on input costs of productions: Leontief input-output price model, Int. J Sup. Chain. Mgt, Vol. 7, No. 5, p. 529-534.
[5] Llop M., (2020), Energy import costs in a flexible input-output price model, Resource and energy economics, 59, 1011130.
[6] Wiebe K. S., Harsdorff M., Montt G., Simas M. S., (2019), A global circular economy scenario in a multi-regional input-output framework, Environmental Science and Technology, 53 (11), 6362–6373.
[7] Minqi Li, (2019), Do Labor Values Explain Chinese Prices? Evidence from China’s Input-Output Tables 1990–2012, Review of Radical Political Economics, 52, issue 1, 115-136.
[8] Bhattacharyya A., Kutlu L., Sickles R. C., (2018), Pricing Inputs and Outputs: Market prices versus shadow prices, market power, and welfare analysis. Chapter 11, [in:] Palgrave Handbook of Economic Performance Analysis, [ed:] Thijs ten Raa and Bill Greene, Palgrave McMillian, 1-55.
[9] Chen B., Li J. S., Wu X. F., Han M. Y., Zeng L., Li Z., Chen G. Q., (2018), Global energy flows embodied in international trade: A combination of environmentally extended input–output analysis and complex network analysis, Applied Energy, 210, issue C, 98-107.
[10] Haddad E. A., Perobelli F. S., Araújo I. F., (2020), Input-Output Analysis of COVID-19: Methodology for Assessing the Impacts of Lockdown Measures, TD NEREUS 1-2020, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS), available at: https://ideas.repec.org/p/ris/nereus/2020_001.html.
[11] Yu K. D. S., Aviso K. B., (2020), Modelling the Economic Impact and Ripple Effects of Disease Outbreacs, 1–4. Process Integr Optim Sustain 4, 183–186, available at: https://doi.org/10.1007/s41660-020-00113-y.
[12] Tabatabaie S. M. H., Murthy G. S., (2020), WITHDRAWN: Development of an Input-output model for Food-Energy-Water Nexus in the Pacific Northwest, USA, Resources, Conservation & Recycling, 100047.
[13] Wang X.-C., Klemeš J. J., Wang Y., (2020), Water-Energy-Carbon Emissions nexus analysis of China: An environmental input-output model-based approach, Applied Energy, 261, 114431.
[14] Zarei M., (2020), The water-energy-food nexus: A holistic approach for resource security in Iran, Iraq, and Turkey, Water-Energy Nexus, 3, 81-94.
[15] White D. J., Hubacek K., Feng K., Sun L., Bo Meng, (2018), The Water-Energy-Food Nexus in East Asia: A tele-connected value chain analysis using inter-regional input-output analysis, Applied Energy, 210, 550-567.
[16] Giammetti R., Russo A., Gallegati M., (2020), Key sectors in input–output production networks: An application to Brexit, The World Economy, 43, Issue 4, 827-1146.
[17] Mandras G. and Salotti, S., (2020), An Input–Output Analysis of Sectoral Specializationand Trade Integration of the WesternBalkans Economies, ECONOMIES, 8 (4), 93, 2227-7099, available at: https://publications.jrc.ec.europa.eu/repository/handle/JRC121926.
[18] de Santana Ribeiro L. C., de Area Leão E. J., da Silva Freitas L. F., (2018), Greenhouse Gases Emissions and Economic Performance of Livestock, an Environmental Input-Output Analysis, Rev. Econ. Sociol. Rural, 56, no. 2, 225-238.
[19] de Mesnard L., (2016), Price consistency in the Leontief model, Dans Cahiers d'économie Politique, n. 71, 181-201.
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[21] Carter A. P., (1970), Structural Change in the American Economy, Harvard Univ. Press. – Cambridge, Mass.
[22] Leontief, W. (1986) Input-Output Economics. 2nd Edition, Oxford University Press, New York.
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    Kulyk Mykhailo. (2021). Analysis and Development of Price Models in the System MEANS of Intersectoral Balance. Economics, 10(4), 125-138. https://doi.org/10.11648/j.eco.20211004.13

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    Kulyk Mykhailo. Analysis and Development of Price Models in the System MEANS of Intersectoral Balance. Economics. 2021, 10(4), 125-138. doi: 10.11648/j.eco.20211004.13

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    AMA Style

    Kulyk Mykhailo. Analysis and Development of Price Models in the System MEANS of Intersectoral Balance. Economics. 2021;10(4):125-138. doi: 10.11648/j.eco.20211004.13

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  • @article{10.11648/j.eco.20211004.13,
      author = {Kulyk Mykhailo},
      title = {Analysis and Development of Price Models in the System MEANS of Intersectoral Balance},
      journal = {Economics},
      volume = {10},
      number = {4},
      pages = {125-138},
      doi = {10.11648/j.eco.20211004.13},
      url = {https://doi.org/10.11648/j.eco.20211004.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20211004.13},
      abstract = {At present, monetary models of equilibrium prices have received a very wide and varied application. In this paper it is proved that the application of the currently existing monetary models of the intersectoral balance is associated with significant methodical errors. It is shown that price models based on the input balance provides such a balance only in unreal cases when the prices of all sectors are the same. For realistic conditions, when these requirements are not met, errors for these models reach unacceptable values. This article proposes and thoroughly investigated new price models based on output balances which do not have the said drawbacks. It is mathematically proven that the new models satisfy the output balances and do not have methodical errors. When used, they provide zero output imbalances for both theoretical and realistic data packets. Also in the paper the calculation results are presented both for the existing monetary models of input-output balance and for new price models using a wide set of initial data. The calculations performed confirm the theoretical conclusions of the article. It is also proved that the Leontief price model is a special case of the generalized model of price indices proposed in the work.},
     year = {2021}
    }
    

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  • TY  - JOUR
    T1  - Analysis and Development of Price Models in the System MEANS of Intersectoral Balance
    AU  - Kulyk Mykhailo
    Y1  - 2021/11/27
    PY  - 2021
    N1  - https://doi.org/10.11648/j.eco.20211004.13
    DO  - 10.11648/j.eco.20211004.13
    T2  - Economics
    JF  - Economics
    JO  - Economics
    SP  - 125
    EP  - 138
    PB  - Science Publishing Group
    SN  - 2376-6603
    UR  - https://doi.org/10.11648/j.eco.20211004.13
    AB  - At present, monetary models of equilibrium prices have received a very wide and varied application. In this paper it is proved that the application of the currently existing monetary models of the intersectoral balance is associated with significant methodical errors. It is shown that price models based on the input balance provides such a balance only in unreal cases when the prices of all sectors are the same. For realistic conditions, when these requirements are not met, errors for these models reach unacceptable values. This article proposes and thoroughly investigated new price models based on output balances which do not have the said drawbacks. It is mathematically proven that the new models satisfy the output balances and do not have methodical errors. When used, they provide zero output imbalances for both theoretical and realistic data packets. Also in the paper the calculation results are presented both for the existing monetary models of input-output balance and for new price models using a wide set of initial data. The calculations performed confirm the theoretical conclusions of the article. It is also proved that the Leontief price model is a special case of the generalized model of price indices proposed in the work.
    VL  - 10
    IS  - 4
    ER  - 

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Author Information
  • Institute of General Energy, National Academy of Science of Ukraine, Kyiv, Ukraine

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