Monetary and Physical Models
In practice, input-output tables are usually expressed in values rather than in physical units. The available data are often limited to the values of the production in each sector (yi, i = 1,2,..., n) and to the values of the deliveries between sectors (zij, i, j = 1, 2,..., n).
Each sector’s revenue is equal to the sum of what it sells to other sectors (in other words, its intermediate demand) and what it sells to consumers, the government, and so on (its final demand). In matrix terms, this gives rise to the following system of equations:
In what follows we will refer to the monetary rather than the physical version of the input-output model.