Mahalanobis Model

THE MAHALANOBIS STRATEGY The essence of the Mahalanobis strategy lay in the following(a) proposition if the rate of growth of an economy depends upon the rate of investment funds, and then the realistic absence of a machine building firmament in an economy closed to trade, would hinder the transformation of nest junkie into investment and thus scuttle the growth process. Mahalanobis accepted the inelasticity of exports as a stylised fact of the Indian economy ; because , he advocated that the machine tool sector should be prioritized in price of investment allocation as it would facilitate the reality of a not bad(p) goods sector. More formally, consider a ii sector closed economy model consisting of cracking and consumer goods. swallow besides that capital goods are of two fibers C and K grammatical case. make headway , if we assume that capital is non-shiftable, it is tantamount to assuming that K grapheme capital goods bottom of the inning produce C type cap ital goods and K type capital goods but C type capital goods can be produce solely consumer goods capital goods are not substitutable across types. If we destine ? t as the share of K type machines in the moderate capital stock in bound t k t i.e. ?t = K K = c K + Kt Kt k t k t and let ? t , the policy parameter recoil the desired division of investment (the incremental capital stock) into K and C type machines i.e.

?t = ?K tk ?K tk ?K tk = = . ?Ktk + ?K tc ?K t It Assuming ? and ? i (i = c,k), the inverse of the capital return ratio in any sector as condition in any period, t he ladder output levels of capital and cons! umer goods can be determined. Simplifying notation by omitting the subscript t , we contract the following output equations : Ct = ?c. ? c = ?c.(1-? t).K , in period t(10) It = ?k Kk = ?k.? t.K , in period t.(11) Y t = Ct + It = [?k.? t + ?c.(1-? t)]K , in period t(12) It / Y t = ?k.? t.K / [?k.? t + ?c.(1-? t)]K In a plan economy,all savings are invested ex ante. Thus, It /...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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