Input-Output models Sample Clauses

Input-Output models. Input-output models (IOM) depict the interdependencies between different sectors of the economy. This framework illustrates how the output from one economic sector becomes the input for another sector and, thus, can cover direct and indirect price changes of different product categories.[6] The indirect impact of carbon taxation policies accounts for higher prices of goods and services using carbon-intensive inputs. This approach commonly assumes that levies are fully passed through to the final consumers. The assumption of inelastic demand corresponds to the short-term incidence of higher prices.[16–19] As these models have a bottom-up representation of the economy, they are capable of producing results on a regional level, such as changes in sectoral prices and production levels. In terms of distributional indicators with a focus on households, the models can provide changes in income and consumption induced by policies for representative households.