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  1. 1 Przegląd Statystyczny

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  1. 1 Kiedrowski R.

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  1. 1 2007

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A MODEL OF CLASSICAL CAPITAL ALLOCATION IN A MULTI-PRODUCT ECONOMY WITH FIXED CAPITAL

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Kiedrowski R.
Przegląd Statystyczny
|
2007
|
vol. 54
|
issue 3
63-91
EN
The paper is devoted to presentation of a dynamic multi-product deterministic model of classical inspiration in which decentralized decisions of economic agents are based on adjustements to different kinds of disequilibria. It is assumed that there are 'n' firms producing 'n' different goods. The goods can be used as well for consumption, current inputs and investment purposes. The firms decide on prices and production levels (capacity utilization) on the basis of disequilibria between supply and demand (inventories of unsold commodities) and on the diffenences between real and target capacity utilization rates. They pay wages to their employees who spend them immediately on consumption goods. Special attention is paid to the process of capital accumulation which is controlled by one representative owner of all firms, named for simplicity a capitalist. In each period the capitalist decides on the value of accumulation taking into account total calculated (expected) profit, average capacity utilization rate and the average interest rate, correlated with inflation rate. Having decided about the total amount of accumulation the capitalist distributes it between enterprises according to their profit rates differentials. Although the accumulation of capital in a certain firm is described in financial terms, it uniquely determines the increase of fixed capital (productive capacity) in subsequent period. It is provided that a long-term classical equilibrium exists in the considered economy. In this equilibrium prices are constant, all profit rates are equal while all physical variables as fixed capital, output or consumption of each good grow at the same constant rate. Moreover, the equilibrium growth rate does nor depend on the analytical forms of worker's and capitalist's consumption functions, and hence the same rate of growth can be achieved for various structures of fixed capital and output adjusted to different consumption patterns
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