Analysis of uncertainty in the Leontief model by interval arithmetic

Abstract

This paper presents an innovative strategy to enhance the precision of economic projections through the integration of interval arithmetic into the Leontief model. We emphasise the utilisation of the Gauss-Seidel method for solving linear systems with interval coefficients. In this paper, we present a method that use the Gauss-Seidel approach to effectively solve linear systems consisting of interval coefficients. This technique enhances traditional methods by incorporating potential value intervals, in addition to exact numerical values. The result is a more precise reflection of uncertainty and a more accurate calculation of solution intervals for economic variables. We have implemented this approach in the Moroccan economic context and the Washington state context using the Gauss-Seidel method to solve linear systems with interval coefficients. Based on real economic data, we have demonstrated how this technique can have a positive impact on the accuracy of output and sensitivity evaluations in the Leontief model.