In this chapter a short run macromodel is considered with three commodities. This model is similar to the ones of Barro and Grossman (1971, 1976), Malinvaud (1977), Böhm (1978,1980), Muellbauer and Portes (1978) and Gepts (1977) (cf. Chapter 1). In the model there is a consumption sector and a production sector. The two sectors take into account the future. The preferences of the consumption sector are represented by a utility function. The preferences concerning the future are supposed to be worked up in the utility function via a money variable as one of the arguments. The utility for money reflects the preferences and expectations of the consumption sector with respect to future expenditure and income. Nevertheless, for sake of simplicity, the utility function is assumed to be independent of present prices and quantity constraints.


Utility Function Labour Supply Maximization Problem Production Sector Consumption Good 
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Copyright information

© Springer-Verlag Berlin Heidelberg 1983

Authors and Affiliations

  • Paul van den Heuvel
    • 1
  1. 1.Economic Institute TilburgTilburgThe Netherlands

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