Journal of Business & Economic Policy

ISSN 2375-0766 (Print), 2375-0774 (Online) DOI: 10.30845/jbep

Maximization of National Income with Linear Programming and Input-Output Analysis: An Application for Turkey
Şenol ALTAN, Seyyide DOĞAN, Hediye İLOĞLU

The input-output and linear programming models are widely used quantitative models for economic planning. Input-output analysis deals with all goods and services produced in an economy on the basis of sectors and analyze the numerical relationship of one sector with others but is not interested in resource allocation. Linear programming model is the main method used for optimal resource allocation. It is aimed in this study to handle effectiveness planning in Turkey's economy by using input-output model and linear programming method. The main goal of this study is to specify the level of sectoral production, investment, and, imports in order to maximize national income. TurkStat’s supply-use and input-output tables of 2002 are used for this purpose. These tables that show the relationship between uniformly dispersed sectors in an economy are rearranged according to the Statistical Classification of Economic Activities within the industry and product classification used in the European Community (NACE Revision 1.1) and the annual Statistical Classification of Products (CPA 2002) and reduced to 25 sectors after consolidation process. Using this consolidated table, a mathematical model is built to maximize national income and define optimum distribution of economic resources and the model is solved by linear programming method.

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