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A Revised Supply Block for the Major Seven Countries in INTERLINK

Listed author(s):
  • Peter Jarrett


  • Raymond Torres


Registered author(s):

    While the philosophy behind the supply block has not changed since its initial version, each of the block's behavioural equations as well as the parameters of the production functions have been substantially modified. These modifications have been motivated, in general, by a wish to improve the consistency of the block and to relax some of the constraints imposed. Consistency has been improved via a minor modification to the procedure for estimating the parameters of the production function, as well as from the inclusion of a measure of "normal" inventory growth in the demand term in the output equation. In the new version, the equilibrium stock/output ratio is no longer treated as a constant; tax considerations and domestic price effects are now included in the business energy price equations, and the dynamic adjustment of the factor demand equations has been made more general. Finally, some research on potential output, based on the revised production model, is reported ... Quoique les principes généraux à la base du bloc d'offre n'aient pas été modifies depuis leur version initiale, les équations de comportements, ainsi que les paramètres des fonctions de production ont subi de profonds changements. Ces modifications ont été motivées notamment par un souci d'amélioration de la cohérence de l'ensemble du bloc et d'allégement des contraintes pesant sur les équations. La cohérence a bénéficié de l'adaptation d'une procédure d'estimation des paramètres des fonctions de production légèrement modifiée, ainsi que de l'incorporation d'une mesure de la variation "normale" des stocks aux équations d'offre. Des contraintes ont été supprimées, notamment, en ne contraignant plus le rapport stock/production d'équilibre a être constant, en généralisant la dynamique de l'ajustement dans les équations de demande de facteurs et en incorporant les effets de la fiscalité et des prix intérieurs aux équations de prix de l'énergie. Enfin, on présentera une recherche sur la production potentielle basée sur le nouveau modèle d'offre.

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    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 41.

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    Date of creation: 01 Apr 1987
    Handle: RePEc:oec:ecoaaa:41-en
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