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Extensions of Model Analysis of the Quantity Adjustment Process in Several Directions

  • Yoshinori Shiozawa
  • Masashi Morioka
  • Kazuhisa Taniguchi
Chapter
Part of the Evolutionary Economics and Social Complexity Science book series (EESCS, volume 15)

Abstract

In this chapter, we will extend the model of the quantity adjustment process presented in Chap.  4 in several directions. Section 5.1 examines the models considering work-in-process inventory, partial adjustment of production volume, and heterogeneity of firms within a sector. It will be shown that, under certain conditions, the stability conditions of these models are given in similar forms to those in Chap.  4, and thus, the introduction of the above factors into the model does not change the basic dynamic properties of the process. Section 5.2 traces the process with stockout, rationing, and bottleneck. A stockout of product inventory leads to a rationing of sales volume among buyers, whereas a stockout of raw material inventory leads to a reduction in the production volume due to bottleneck. Numerical computations will highlight the buffer role of inventories in the adaptations of the whole economy to a one-time increase or random fluctuations in final demand. Finally, Sect. 5.3 investigates the effects of mid- and long-term changes in final demand. It will be confirmed that, while quantity adjustment can follow the gradual movement of final demand accompanied by the inducement of consumption demand from past income, it cannot suppress the oscillations caused by unstable movements of final demand itself.

Keywords

Work-in-process inventory Partial adjustment Firm-level model Stockout Rationing Bottleneck Induced consumption demand 

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Copyright information

© Springer Japan KK, part of Springer Nature 2019

Authors and Affiliations

  • Yoshinori Shiozawa
    • 1
  • Masashi Morioka
    • 2
  • Kazuhisa Taniguchi
    • 3
  1. 1.Osaka City UniversityOsakaJapan
  2. 2.College of International RelationsRitsumeikan UniversityKyotoJapan
  3. 3.Faculty of EconomicsKindai UniversityOsakaJapan

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