Stationary Population: Leontief Simulations

Abstract

This case corresponds to the following production function:

$$ F(K_t,X_t)=\theta\min\{aK_t,bX_t\}, $$

((1))

for $\theta,a,b$ positive parameters. Given the amount of capital, $K_t$, according to Section| 3 of Chapter| 4 this production function generates the following demand function for labour:

$$ N_t=\frac{a}{b}K_t \hskip1truecm (\theta b>w_t); $$

((2))

otherwise we have

$$ N_t=0 \hskip1truecm (\theta b\leq w_t). $$

((3))

Indeed, since output has been chosen as a| numeraire, $\theta b$ measures the marginal productivity of labour input.