Question
Leontief used the 1947 input-output table of the US economy (He received his Nobel prize for his contribution to input-output analysis later). He aggregated industries
Leontief used the 1947 input-output table of the US economy (He received his Nobel prize for his contribution to input-output analysis later). He aggregated industries into 50 sectors. He also aggregated factors into two categories, labor and capital. He then estimated the capital and labor requirements to produce: Capital and Labor Requirements to produce one million dollars worth of the typical exportable and importable bundles in 1947.
| Capital Requirement | Labor Requirement |
Exports | aKx = 2.550780 | aLx = 182.313 man-years |
Imports | aKm = 3.091339 | aLm = 170.114 man-years |
Leontief s Paradox is an example of testing a trade model using actual data observations. If Leontief had observed that the amount of labor needed per $1 million of U.S. exports was 100 instead of 182,would he have reached the same conclusion? Explain
Also ,what were the problems of Leontiefs calculations of capital and labour content of US exports and imports. Comment.
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