On the financial balance of input–output constructs: revisiting an axiomatic evaluation

Abstract

Financial balance is fundamental to input–output analysis (IO), andconsequently the respect of this balance is one of the dominant criteria inevaluating IO constructs. Kop Jansen and ten Raa (1990) proved that thebyproduct-technology construct (BTC) and the industry-technology con-struct (ITC) do not generally conserve financial balance. In contrast, Majeau-Bettez et al. (2016) demonstrated that the BTC necessarily respects finan-cial balance and that the ITC is always financially balanced when applied todata recorded in monetary units. The present article resolves this paradox.