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Research Bulletin (Iowa Agriculture and Home Economics Experiment Station)

Abstract

This study is a continuation of an earlier one which was initiated to establish quantitative relationships among agricultural and nonagricultural sectors of the economy. These relationships are of interest because of increased interdependence of sectors as the economic structure of our society becomes more complex. Agriculture is becoming more dependent upon the rest of the economy for its inputs. In the earlier study, Peterson and Heady (34) estimated that input purchases by farmers from industry increased from 28 cents per dollar of crop output in 1929, to nearly 50 cents per dollar of crop output in 1949. Future data are likely to reflect even greater interdependence between agriculture and industry.

The national government has assumed, and is likely to maintain, an increased role in consciously affecting the nature and the intensity of economic activity. If this task is to be carried out intelligently, prior knowledge of the structure of the economy is essential. Historically, the source of such knowledge has been research considering small segments of the economy alone. Input-output analysis (27), the technique used in this study, allows a general equilibrium analysis of the relationships among all economic sectors. It permits, under the limitations of linear coefficients, consideration of the interrelationships between various sectors of the economy resulting from outside disturbance such as a change in final demand.

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