Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: The analysis of economic systems / Richard Stone, Cambridge University - Cambridge - Great Britain

Collection:: Economics Books

PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 effects of prices appear implicity, however, in the projection of input-output coefficients, which will also be discussed in section 4. There is, of course, nothing final about this arrange- ment; it is simply a reflection of practical difficulties. In terms of diagram 4, we see total consumers’ expenditure and domestic prices coming together to determine consumption demands. The level of consumers’ expenditure is fixed by assumption and left unchanged through each run of the cal- culations, but relative prices can, initially, only be guessed at. However, as the model simulates the productive process, it ouilds up a cost structure in each branch of activity and this makes it possible to revise the initial estimates of prices, as fol- lows. Given an average wage rate as a unit of account and the corresponding rates of profit implied by the efficient distri- bution of labour and assets, we work out the future costs of labour and capital per unit of output in each industry and thus obtain values added per unit of output. To these we add the cost of intermediate inputs and of indirect taxes and thus obtain the cost, or price, of a unit of output in each industry. [f these new domestic prices are different from those we had assumed at the start, we must alter the figure for total consu- mers’ expenditure to correspond, and repeat the cycle of cal- culations until our estimates of prices cease to change. If in the model future consumption is to be sensitive to future prices, two things are needed: 1) a set of price-sensitive demand functions; and 2) a set of future prices. Let us now see how each of these requirements is met. In the following treatment I shall restrict myself to private consumption and I shall find it convenient to set out the analysis on a per head basis; to apply the results to the whole community all that is needed is to multiply them by the population. As explained in [7], our model of consumers’ behaviour is a variant of the linear expenditure system which allows expli- 1] Stone - pag. 50

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