Mahalanobis Model

THE MAHALANOBIS STRATEGY The essence of the Mahalanobis strategy lay in the following(a) advise if the rate of growth of an economy depends upon the rate of enthronization, and then the practical(prenominal) absence of a machine building welkin in an economy closed to trade, would hinder the transformation of nest egg into investment and thus scuttle the growth process. Mahalanobis accepted the inelasticity of exports as a stylised fact of the Indian economy ; because , he advocated that the machine tool sector should be prioritized in hurt of investment allocation as it would facilitate the reality of a swell goods sector. More formally, consider a ii sector closed economy model consisting of metropolis and consumer goods. swallow nurture that capital goods are of two fibers C and K flake. tho , if we assume that capital is non-shiftable, it is tantamount to assuming that K cause capital goods quarter produce C type capital goods and K type capital goods but C type capital goods can be produce solely consumer goods capital goods are not substitutable across types. If we destine ? t as the share of K type machines in the lance capital stock in fulfilment t k t i.e. ?t = K K = c K + Kt Kt k t k t and let ? t , the policy parameter recoil the desired division of investment (the incremental capital stock) into K and C type machines i.e.

?t = ?K tk ?K tk ?K tk = = . ?Ktk + ?K tc ?K t It Assuming ? and ? i (i = c,k), the inverse of the capital widening ratio in any sector as abandoned in any period, the ladder output levels of capital and consumer goods can be determined. Simpl! ifying notation by omitting the subscript t , we fuck off the following output equations : Ct = ?c. ? c = ?c.(1-? t).K , in period t(10) It = ?k Kk = ?k.? t.K , in period t.(11) Y t = Ct + It = [?k.? t + ?c.(1-? t)]K , in period t(12) It / Y t = ?k.? t.K / [?k.? t + ?c.(1-? t)]K In a be after economy,all savings are invested ex ante. Thus, It /...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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