The demand driven and the supply - sided Input - Output models . Notes for the debate

Input-Output is a production model; in the original Leontief’s open version final demand determines the level of activity, assuming technology as given. Ghosh’s formulation, on the contrary, assumes that value added determines output in a supply-driven account; producers must induce sales in order to achieve a desired level of income. The supply–driven model has been criticised on the bases of its implausibility and its difficult interpretation. This paper argues that, even though the theoretical foundations of the supply-side model are somewhat unusual, it fits perfectly with the standard demand-driven model and Leontief’s arguments.