An examination of the flow of goods among industries in an economy or among branches of an organization. An input-output matrix is used to show interindustry or interdepartmental flows of goods or services in the economy, or in a company and its markets. The matrix can be used to forecast the effects of a change in one industry on other industries (e.g., the effects of a change in oil prices on demand for cars, then steel sales, then iron ore, and then limestone.) Although input-output analysis led to one Nobel prize (Wassily Leontief’s in 1964), its predictive validity has not been well-tested. However, Bezdek (1974), in his review of 16 input-output forecasts in seven countries made between 1951 and 1972, concluded that input-output forecasts were more accurate than those from alternative techniques.

• Bezdek, R. H. (1974), “Empirical tests of input-output forecasts: Review and critique,” U. S. Department of Commerce, BEA Staff paper No. 24, July 1974.