A policy model for regional trade and development

Abstract

The multi-country, multi-sector models introduced in Chapter 5 were examples of open input-output models. In this chapter we will formulate a closed model in which final demand categories like consumption and investments of the categories of commodities distinguished are endogenous. Marginal propensities to consume have been used in order that the sum of consumption of the different commodity categories is equal to domestic production minus savings. The usual Harrod-Domar production function, showing the amount of investments of each commodity that each sector requires for its future expansion, is introduced, assuming constant partial capital coefficients for investments of good k into sector l.