An operational , nonlinear input - output system

We develop a scale-dependent nonlinear input-output model which is a practical alternative to the conventional linear counterpart. The model contemplates the possibility of different assumptions on returns-to-scale and is calibrated in a simple manner that closely resembles the usual technical coefficient calibration procedure. Multiplier calculations under this nonlinear version offer interval estimates that provide information on the effectiveness and variability of demand-driven induced changes in equilibrium magnitudes. In addition, and unlike linear multipliers, the nonlinear model allows us to distinguish between physical and cost effects, the reason being that the traditional dichotomy between the price and quantity equations no longer holds in the nonlinear model version. Preliminary analysis will use archetype interindustry data for US, China and Brazil. Here in this version we show results for a simplified small economy.