Economic Growth and Dynamic Equilibrium

摘要

The model described has the same general features of the PILOT dynamic macro-economic model of the US except the current integrable demand functions of final consumers in each time period are replaced by nonintegrable ones derived from those of individual consumers. The path followed by the economy can be found by solving an adjusted primal problem using as objective a discounted sum of functions which are measures of the standard of living in various time periods. Typically this implies growth in the per capita standard of living if the economy has potential for growth. The adjustment, however, uses data derived from the equilibrium solution. We then introduce an important behavioral assumption regarding dual-price profitability conditions - namely that the investor calculates his discounted cash flows by first normalizing prices in each future time period before applying his discount factors. We prove equilibrium solutions in this case exist and discuss techniques for finding them. Finally we develop the form of the nonintegrable per capita demand functions as a function of per capita income based on survey data on the distribution of income shares of individual consumers and consumption patterns as a function of income. (ERA citation 10:002432)