Inverse problems in analysis of input-output model in the class of CES functions (Q2660895)

A new class of theoretical input-output balance models analyzes the spread of economic shocks, taking into account inter-industry links by letting the cost rates of production factors be shaped by industry differentiation. Unlike Leontief's models, in these models, the balance ratios are nonlinear. This paper presents a model of a nonlinear input-output balance in the form of a convex programming problem. It proposes an algorithm for solving the inverse problem of identifying a nonlinear input-output balance model in the class of functions with constant elasticity of substitution (CES-functions). Based on the use of the Young transform and Fennel duality, it puts forward a technology for analyzing inter-industry relations using such model based quantitatively on available Russian statistics. It also works out methods for medium-term macroeconomic analysis.