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converted them into demands for industrial products and for
each product have calculated the growth rate which would
accompany a given growth rate in consumption as a whole.
The first relationship we have to consider connects this information
 with the investment demands of industry. We can ignore
replacement demands since, until we improve our production
functions, these depend, as I have said, on past investment
and on the fixed life-spans assumed for different assets. We
need therefore a relationship connecting consumption demands.
and their rates of growth with industrial extensions.
To obtain this relationship, we first write the basic flow
equation for products in the form

(IV. 1)

q=Ag+v+e

where q, v and e denote respectively vectors of output, industrial
 investment and consumption, and where A denotes a
current input-output coefficient matrix. Equation (IV. 1) states
that output is divided between intermediate demands, Ag, and
final demands, (v+e); and that final demands are divided
between investment demands v, and consumption demands, e.
Second, we write the relationship between investment demands
 and the growth of output from one year to the next in
the form

(IV. 2)

v=KAg

where Ag denotes the excess of next year’s output over this
year’s output and K denotes a capital input-output coefficient
matrix.

Finally, we consider the case in which the components of
consumption are to grow exponentially. This can be expressed
in the form

IV. 3)

Ee= (I+7)e

I] Stone - pag. 42