612 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - -

ratio. This is a well-known relation. As the reader will realize,
condition (III.ro) is simply a more analytical formulation (referred
 to the case of population growth) of what has become
generally known in macro-economic theory as the HArrop-Do-MAR
 equation (?).
To conclude, two types of conditions must necessarily be
satisfied in order to keep equilibrium over time. There is, first
of all, a series of capital accumulation condition (IIT.6), ensuring
 that each sector be endowed all the time with the additional
productive capacity required by the expanding demand. These
conditions. state that, in each sector, the ratio of new investments
 to the level of production must be equal to the technologically
 determined capital-output ratio multiplied by the rate
of population growth. Secondly, in order to ensure the full
utilization of the productive capacity that thereby comes into
being and of the available labour force, the macro-economic
effective demand condition (III.g) must also be satisfied. This
condition determines the equilibrium division of total expenditure
 between consumption, replacements, and new investments.
 It states that, given the total amount of equilibrium
investments by the first series of conditions and by the replacement
 requirements, total demand for consumption goods must
be such as to absorb the whole remaining part of potential
gross income.

Lea Pit

4

441,

And since, in equilibrium, X; = K;, we obtain:
=p

0.E.D.

(*) See R. F. Harrop, An Essay in Dynamic Theory in « The Economic
Journal » 1939, and Towards a Dynamic Economics, London 1948; E. Do-MAR,
 Capital Expansion, Rate of Growth and Emblovment, in « Econometrica
 », 1046.

[10] Pasinetti - pag. 42