Straightening out the concept of direct and indirect input requirements

Abstract

Gim & Kim (1998) proposed a generalization of Jeong (1982, 1984) reinterpretation of the Hawkins-Simon condition for macroeconomic stability to off-diagonal matrix elements.This generalization is conceptually relevant for it offers a complementary view of interindustry linkages beyond final or net output influence.The extension is completely similar to the 'total flow' idea introduced by Szyrmer (1992) or the 'output-to-output' multiplier of Miller & Blair (2009).However the practical implementation of Gim & Kim is actually faulty since it confuses the appropriate order of output normalization.We provide a new and elementary solution for the correct formalization using standard interindustry accounting concepts.

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