THE SUPPLY-DRIVEN INPUT-OUTPUT MODEL: A NEW INTERPRETATION BUT STILL IMPLAUSIBLE

ABSTRACT. In this reply, I argue that the production function proposed by Gruver provides a theoretical foundation for the supply model only in a most trivial case. He proposes a more general alternative which is, however, still very implausible. Furthermore, against Rose and Allison, I argue that small input-coefficient changes provide an insufficient excuse for using the supply model for impact studies, and I show that employment estimates may be quite different depending on the approach used.