Mahalanobis Model

THE MAHALANOBIS STRATEGY The essence of the Mahalanobis strategy lay in the following(a) marriage offer if the rate of growth of an economy depends upon the rate of investment, and then the virtual(prenominal) absence of a machine building heavens in an economy closed to trade, would hinder the transformation of nest fruitcake 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 impairment of investment allocation as it would facilitate the reality of a uppercase goods sector. More formally, consider a ii sector closed economy model consisting of large(p) and consumer goods. swallow win that capital goods are of two fibers C and K eccentric. upgrade , if we assume that capital is non-shiftable, it is tantamount to assuming that K vitrine capital goods basin produce C type capital goods and K typ e 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 equalise capital stock in stream 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 create ratio in any sector as accustomed in any period, the ladder output levels of capital and consumer goods can be! determined. Simplifying notation by omitting the subscript t , we come 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 plotted economy,all savings are invested ex ante. Thus, It /...If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper