3 ms·
> But I think in economics a circular graph doesn't really make sense, does it? Leontief functions are a list of what inputs and outputs each technology a coun
by chalst 13y ago
> But I think in economics a circular graph doesn't really make sense, does it?
Leontief functions are a list of what inputs and outputs each technology a country uses as inputs and yields as outputs. So farming a region might require 100 tractors (inputs), of which 95 will be in good condition at the year's end (outputs), and need 50 000 hours of labourer time (input) and yield 10 000 tons of corn (output).
Then a network of trade will usually give you circular graphs: Country A produces corn that is imported by country B to feed its workers. Country B produces iron that is imported by country C as an industrial raw material. Country C produces tractors that are imported by country A for farming.
I think Leontief functions are one of the cooler ideas in economics: they get very close to the empirical data and they allow you to leverage linear algebra effectively. They've been important in some fundamental debates in economics, particularly the Cambridge capital controversy.