International Journal of Global Community (Riksawan Institute - IJGC-RI)
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The net multiplier is a new key sector indicator:Reply to De Mesnard's comment
No full textMost of the comment of de Mesnard applies to a causal interpretation of the net multiplier that is applied to economically impossible exogenous (changes in) total output. This reply shows that this interpretation is incorrect and that his further argumentation is based on a time inconsistent derivation of the Leontief output multiplier. Instead the net multiplier concept is designed as a two-way dependency or net contribution indicator that-when applied to all sectors-reproduces the exact size of the economy at hand. De Mesnard's iterative alternative does not satisfy this output preservation requirement and therefore it is not a proper net multiplier. Instead it equals an old gross multiplier, namely the one that indicates the indirect output effect per unit of final demand.</p
