Economic Theory in Input-Output Framework

Input-Output (I-O) analysis has usually been considered as a set of techniques to collect, classify and organise the data on inter-industrial transactions that are involved in the production activities of an economic system and test hypotheses that emerge from economic theories. The possibility that it is itself a component of economic theory is not always taken seriously in mainstream economics. This paper uses I-O analysis to describe the supply situation and confronts it to the linear expenditure system that represents the final demand situation. What is obtained is a general equilibrium model that is an alternative to neoclassical general equilibrium models.