SEMAINE D'ÉTUDE SUR LE ROLE DE L ANALYSE ECONOMETRIOUE ETC.
D
example that it should not fall below a certain level or that it
should not fall below the level of the preceding year.
The attempt to solve this problem will show whether or not
it is solvable. If it is not, we have either put an insufficient
restriction on consumption during the transitional period or we
have set our sights too high for the post-transitional period.
In any case we can make a modification and try again until we
obtain a solution.
Once we have a solution we can examine the whole time-
path of consumption. Before the base period consumption
moved in a known way; we have just calculated its path
through the transitional period; and we have arranged that it
shall be able to grow at such and such a rate after the transi-
ional period. Taken as a whole this path may be unacceptable
because, let us say, it is too uneven: it may show a certain
rate of growth up to the transitional period, followed by a
slower one which increases enormously at the end of the trans-
tional period to meet the initial conditions of the steady state,
‘ollowed by the long-run growth rate. An acceptable path
should, one might suppose — though this is a political question
— be reasonably smooth. One way of smoothing it would be
to reduce the level of consumption assumed for the beginning
of the steady state; in other words, to make the take-off into
steady growth start from a lower level. The purpose of iter-
ation between the two models is to reach an acceptable path.
In the following two chapters I shall show how the basic
simplifications adopted in the above account can be removed
doth in theory and in practice. There is, however, one im-
portant point that must be mentioned here since it affects the
relationship between the two models. Briefly, it is this.
[ have so far assumed fixed relationships between the assets
available to an industry and its capacity to produce, and be-
-ween the assets installed in an industry and the investment
necessary to instal them. Consequently, the investment of the
‘ransitional period could in principle take place at any con-
11 Stone - pag. 3
