Wassily Leontief

Who Was Wassily Leontief?

Wassily Leontief was a Nobel Prize-winning Russian-American economist and teacher who contributed several wise speculations to economics. Leontief's Nobel Prize research zeroed in on input-output analysis, what breaks down the sectors of the economy and talks about what changes in a single sector can mean for different sectors.

Figuring out Wassily Leontief

Wassily Leontief was brought into the world in Germany in 1906 and passed on in New York City in 1999 at 93 years old. As an economist, he made several contributions to the science of economics. Leontief's research into sectors prompted his development of input-output analysis, which won him the Nobel Memorial Prize in Economics in 1973. Leontief is likewise credited with his discovery of the Leontief Paradox and the Composite Commodity Theorem.

All through his professional life, Leontief advanced the utilization of quantitative data in economics. Leontief lobbied for more extensive and more profound developments in the area of quantitative data analysis all through his career. He was likewise quite possibly the earliest economist to involve a computer for quantitative research.

Leontief instructed at Harvard University for a long time and in this way at New York University. He filled in as leader of the American Economic Association in 1970. Four of Leontief's doctoral understudies were additionally granted the Nobel Prize, including Paul Samuelson (1970), Robert Solow (1987), Vernon L. Smith (2002), and Thomas Schelling (2005).

Leontiff's Research

Input-Output Analysis

One area in which Leontief sought after his goal of making economic analysis more quantitative was in fostering an empirical implementation of general equilibrium theory. To do this, Leontief separated the U.S. economy into 500 sectors, laying out one of the main economic sector classification systems. He developed input-output tables for sector analysis that estimated the impact a change in production of a decent has on different industries and their inputs — laying out the reliant connections of economic sectors.

Analysts can utilize input-output analysis to estimate the impacts of positive and negative economic shocks by showing the changing demand for inputs when the production of outputs changes. This assists with breaking down ripple effects all through an economy as changes in demand for definite goods move gradually up the supply chain. Input-output tables can deliver extremely good guesses for small or moderate changes in outputs, but since they expect fixed production technology they can't precisely account for the dynamics of a real economy. Leontief's input-output analysis has been utilized by the World Bank, the United Nations, and the U.S. Department of Commerce.

The Leontief Paradox

Leontief likewise concentrated on trade flows during the 1950s. In view of input-output analysis of international trade he found that the U.S., a country with a great deal of capital, was importing capital-intensive commodities and exporting labor-intensive commodities. This is rather than prior hypotheses of international trade, which foresee that countries will work in and export goods that they enjoy a comparative benefit in creating. This means that a capital rich country, like the U.S., would be expected to export capital-intensive goods and import labor-intensive goods from countries where labor is comparatively less expensive.

The Leontief Paradox, as it came to be known, drove numerous economists to scrutinize the Heckscher-Ohlin Theorem, which states that countries produce and export what they can make most productively, contingent upon their factors of production. In addition, they import goods that they can't create as productively. Several later economists proposed answers for this apparent paradox, including the Linder Hypothesis and the Home Market Effect.

Remarkably, Leontief's Paradox doesn't account for human capital and the subsequent difference among skilled and unskilled labor. Later researchers showed that U.S. exports were skilled-labor-intensive — or, all in all, human capital intensive relative to imports — settling the Leontief Paradox for the comparative advantage view.

Composite Commodity Theorem

The Composite Commodity Theorem was a third major development credited to Leontief, who fathered the concept with John Hicks. This states that assuming that the relative prices of a basket of goods are assumed to be fixed, then, at that point, they can be treated as a single composite really great with the end goal of mathematical modeling. This simplified the conditions expected to model price theory.

Features

• Leontief won the Nobel Prize in 1973 for his research on input-output analysis.
• Wassily Leontief was a Russian-American economist who made several contributions to the world of economics.
• Leontief was additionally credited with the Leontief Paradox and the Composite Commodity Theorem.