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Price consistency in the Leontief model

Abstract : The Leontief model actually uses two periods, base and current periods. The model is solved with current price indexes and the base technical coefficients. The corresponding physical model is monoperiodic: it is solved with the current prices and the current coefficients. The Leontief model is not coherent—both models diverge generally—unless the interindustry matrix of direct and indirect quantities of labor is stable over time. This implies that the vertically integrated labor coefficients are stable. This assumption is satisfied when the physical production coefficients and the physical labor coefficients are stable over time, two very strong assumptions.
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Contributor : Louis de Mesnard <>
Submitted on : Monday, June 27, 2016 - 8:33:27 PM
Last modification on : Tuesday, October 27, 2020 - 2:34:47 PM



Louis de Mesnard. Price consistency in the Leontief model. Cahiers d'Economie Politique = Papers in political economy, L'Harmattan, 2016, 2 (71), pp.181-201. ⟨10.3917/cep.071.0181⟩. ⟨halshs-01338092⟩



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