SEMAINE D’ETUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC
which shows the value of the change in capacity net output,
py, divided into a part due to labour, wil, and a part due
to capital, »* v*; or as
(IV. 10)
A: — (pAy
AT
+
U*
Ww
which shows the change in employment, Al, as equal to the
value of the change in capacity net output, py, minus the part
due to capital, #* v*, all divided by the wage rate, w. As
described in [5], estimates can be made of the terms on the
right-hand side of (IV. 19) over a future period, and this enab-
les us to calculate Al for the different industry groups.
On this basis, the initial stock oi assets required in 1970
is determined by capital-output ratios. The allocation of labour
to the different industries (1) is such that the labour force ex-
pected to be available is fully used and (2) implies that the
initial rates of return (or pay-off periods) are the same as,
or related to, those observed in an earlier period. The required
changes in labour productivity in the different industries emerge
from these calculations and average out to the productivity
implied by the total increase in output and the total labour
available.
The results obtained by this method are based on less in-
formation than would be supplied by production functions. As
a consequence they are provisional and are certainly not de-
monstrably achievable. They do, however, provide a ground
for discussion with individual industries until we have deve:
loped our production functions.
b) The price circuit. At the moment, prices enter expli-
city into the model only as determinants of the composition of
private consumption, government consumption being treated
in a simpler wav indicated in section 4 below Many of the
1] Stone - pag. 40