The Korean Journal of Economic Studies
A Comparison of Supply Multiplier and Output Multiplier in Input-Output Model: Theoretic and Empirical Critics on Output Multiplier
Haemyoung Ji (Kangwon National University), Eun Kyung Choi (Kangwon National University), Woojin Han (Kangwon National University), Li Ze (Kangwon National University)Year 2019Vol. 67No. 3
Abstract
The output multiplier, which replaces supply with production in calculatingdistribution coefficient from the supply multiplier, results in a distortion of themultiplier effect of the supply multiplier. The results of an empirical analysisusing the Input-Output Table(2014) show that the effect of an output multiplierin the intra-industry is similar to that of a supply multiplier, but theinter-industry effect of the output multiplier is estimated to be about 11 timesmore than that of the supply multiplier. Overall, there is a 5.6-fold gapbetween multipliers in 2014. The gaps are widening in an industry with largegaps between production and supply, which is represented by mining, manufacturing and service industry in turn. The inter-industry demands ofmining and manufacturing have a high inter-industry relation compared to thatof service. Consumer service and public service which do not have a deepindustrial relationship, have little distortion of the effects of the supplymultiplier.