A Dynamic Model of the Economy
Abstract1. In  we considered a one-product model of the economy and used it to calculate the norm of effectiveness. A more specific analysis may investigate the behavior of a number of industries and products. In the present paper, retaining the macroeconomic character of the model, we introduce two products and two departments, following the scheme of Karl Marx. It is assumed that the output of the first department serves as the source of capital for both departments, and the output of the second department is used for consumption. The conditions of production, which may be expressed by a production function, are not assumed to be identical for both departments. We will denote by >i>K>/i>>sub>1>/sub> and >i>P>/i>>sub>2>/sub> the capital stock of the first and second departments, and by >i>P>/i>>sub>1>/sub> and >i>P>/i>>sub>2>/sub> the net output of the first and second departments. We assume that production functions >i>U>/i>>sub>1>/sub> and >i>U>/i>>sub>2>/sub> are given.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Problems of Economic Transition.
Volume (Year): 19 (1976)
Issue (Month): 4 (August)
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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=106047
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