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:: Decision rules and simulation techniques in development programming / Henri Theil, Nederlandsche Economische Hoogeschool - Econometrisch Institut Rotterdam - Nederland

Collection:: Economics Books

180 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 multiple d - d, has to be added. This multiple is obviously positive, since the increasing desires in later years require more saving in the beginning. 6. THE SIMULATION TECHNIQUE We shall now apply the ideas set forth numerically by means of a simulation technique. Thus we consider a number of countries whose economies are taken care of by an equal number of decision makers. These decision makers control the savings ratios of their respective countries and do so, year after year, on the basis of the decision rule (5.10). That is, each of them maximizes the expectation of the utility function (3.7) subject to the random constraint (3.4), where it is assumed that the desired values of the log-changes in per capita con- sumption are of the form (5.9) and that the rate of change of the population satisfies the stochastic difference equation (5.7). This equation supplies the random element of the process, which is of course the rationale of the simulation technique. Fifty countries have been considered, each during a period of 50 years. All start with an initial savings ratio (x,) of 10%. The first-year desired increase (d,) of per capita consumption is 2% %, the long-run desired increase (d) is 74%. The coef- ficient 7 of (5.9) is put equal to 0.95, which implies that after about #=15 years there is a desired increase d, half-way be- tween the first-year and the long-run desire, d,= (4, +d)=5%- The expected value of the rate of increase of the population, v, is taken equal to 0.015. The random variables e, of (5.7) have been generated as normal variates with zero mean and three alternative standard deviations: 0.005, o.or and 0.02. These alternatives are chosen to illustrate the importance of 7] Theil-- pag. 16

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