Full text: Study week on the econometric approach to development planning

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PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 
1. The conditions for a dynamic equilibrium 
According to our assumptions, when our analysis begins 
(time zero), the economic system we are considering is in equi- 
librium — there is full employment and full utilization of pro- 
ductive capacity. We know already that, if this equilibrium 
situation is to be kept, two types of conditions must be satisfied. 
First of all, since both population and technology are chang- 
ing, the system must continually enlarge its productive capa- 
city so as to keep up both with the increasing demand and with 
the increasing labour force. This means that, in each sector, 
a very definite relation must be satisfied between new invest- 
ment and the rate of change of the corresponding final demand 
for consumption goods. The problem has been discussed al- 
ready in section 2 of chapter III. By following here exactly the 
same procedure. the mentioned relations emerge as 
(V.8) A, ,(t)=(g+r;) a,,(t), 1=1. 2. ... (n-1) 
which represent the capital accumulation conditions for keep- 
ing full employment over time. 
After explicitly inserting the dynamic movements of demand 
and of population that have been postulated, the (V.8) mav also 
be written as 
(V.9) a, (BO =(g+7) a,(t-0 gard 
or, if we refer them to total net investment in each sector (ins- 
tead of referring them to per-capita investment), they may also 
be written as 
(V.10) Xpa)=(g+7) X, (t- 0) a,(t-0) 9+" 
(10] Pasinetii - pag. 78
	        
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