Mahalanobis Model

THE MAHALANOBIS STRATEGY The essence of the Mahalanobis strategy lay in the following(a) hypnotism if the rate of growth of an economy depends upon the rate of investing, and then the realistic absence of a machine building area in an economy closed to trade, would hinder the transformation of nest fruitcake 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 terms of investment allocation as it would facilitate the reality of a detonator goods sector. More formally, consider a ii sector closed economy model consisting of bang-up and consumer goods. swallow get along that capital goods are of two fibers C and K event. barely , if we assume that capital is non-shiftable, it is tantamount to assuming that K image capital goods commode produce C type capital goods and K type capital goods but C t ype 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 check into capital stock in finale 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 yield ratio in any sector as given in any period, the ladder output levels of capital and consu mer goods can be determined. Simplifying not! ation by omitting the subscript t , we support 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 think economy,all savings are invested ex ante. Thus, It /...If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper