Modeling Defense Budget Relationships with an Input-Output Model

Abstract

The Department of Defense, like any major organization, must make many budget tradeoffs. Increasing funding for one program is often at the expense of another program. Senior decision-makers need an assessment of the resulting balance among various budget areas. We propose applying the Leontief input-output model to analyze the interrelationship between various budget areas and to assess the impacts of funding changes in one budget area on other budget areas. We present two Air Force examples, which model the appropriations and major force programs, to demonstrate the types of questions that analysis based on the input-output model may answer.

Key Words:

• input-output analysis
• defense budgets
• tradeoffs