Effects of Redistribution of Final Demands in a Leontief System Involving Abatement Activities

Abstract

In this paper, we examine how a redistributional scheme of exogenous expenditure affects the economic activities in an open static Leontief model including the abatement industries. The redistributional scheme is attained through the reallocation of the final demand for a commodity of one industry to another industry. Our main argument is to investigate the changes in euilibrium outputs resulting from executing the redistributional scheme. Further, we discuss how to choose the industries redistributed the final demands, so as to minimize the negative effects caused by the scheme.