On the Importance of Lags in Growth Models

Abstract

This paper is mainly a study of the importance of lags in growth models of the von Neumann type. Lags considered are of two kinds. There are first, the lags in the formation of capital and second, the lags in satisfying the intermediate and final demand. These two kinds of lags slow the expansion of the economy but it is shown that a change in the length of the first kind of lags will not in general have an important effect on the rate of growth of the economy while for the second kind it may have a more drastic effect. The study is made in the framework of a dynamic Leontief model presented by Tsukui. Some calculations are made using his data. A method for handling the second kind of lags is also proposed.

I would like to thank M. Boyer and Prof. G. L. Thompson for their helpful comments.