Extending the input-output model with assets

In this paper, the input-output model is extended with assets. It allows us to examine the various assets that are held and used in production. The requirements of assets that must be held by each sector can thus be specified. Extending the input-output model with assets provides a better alternative to the capital stock matrix in the standard Systems of National Accounts. The input-output model is extended by taking the depreciation of fixed assets into full account. This extension allows for the calculation of total holding coefficients that express the amount of assets that are required to be held in each sector in order to satisfy a unit of final demand. In addition, a dynamic version of the extended model is presented. The extended input-output model has been widely applied in China for various purposes.