Journal Article Constancy of the Proportionate Equilibrium Rate of Growth: Result or Assumption? Get access Hans Brems Hans Brems Urbana, Illinois Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 24, Issue 2, February 1957, Pages 131–138, https://doi.org/10.2307/2295766 Published: 01 February 1957

I. Goods and money, 303. — II. The variables of the model, 304. — III. The real-sphere behavior equations, 305. — IV. The money-sphere behavior equations, 306. — V. Two equilibrium conditions, 308. — VI. A politically given parameter, 308. — VII. Solution, 309. — VIII. The sensitivity of national output to changes in the parameters, 310. — IX. Conclusion, 312.

I. Introduction, 252. — II. Assumptions, 253. — III. The duopolists' hypotheses about rival behavior, 255. — IV. The duopolists' maximum effective, expected profits, 257. — V. Minimum requirements of A and B confronted, 258. — VI. Chances for agreement, 258. — VII. The result of bargaining, 260. — VIII. Lesson on bargaining techniques, 260.

I. The problem, 418. — The assumptions, 420. — II. Diagrammatic analysis, 420. — The marginal cost curve: selling-effort and quality criteria independent, 422; selling-effort and quality criteria not independent, 431. — Different ways of increasing sales, 432. — The concept "quality improvement, " 435. — III. Varying the price assumption, 435. — The "locus, " 437. — The optimum price, 437. — IV. The problem of the initial quality, 438.

i. The problem. Current theoretical growth models of Harrod-Domar type have determined the growth rate, by which is usually meant proportionate rate of growth of net or gross national product. But rates of growth of labor force, hours, and productivity are ignored in such models. This neglect is very much in Keynesian tradition. The static Keynesian model makes no distinction between goods and factors and between level of output (of goods) and level of employment (of factors). Dynamizing Keynesian model, growth models of Harrod-Domar type consequently make no distinction between time path of output and time path of employment. The purpose of present paper is to examine more closely relationship between four growth rates of output, labor force, hours, and output per man hour and in particular ' to find determinants of proportionate rate of growth of output per man hour. For this purpose, a slight disaggregation of Harrod-Domar model becomes necessary. If only two sectors are desired, most obvious division in economy is that between firms and households. We shall therefore consider a closed economy and shall ignore government. For disaggregation purposes, best notation is probably Leontief notation.2 Here, each transaction (x) has two subscripts. The first subscript refers to sector of origin, last refers to sector of destination. The subscript f refers to firms, subscript h to households. Three transactions, shown in Table I, are considered. First, firms plan to purchase

i. The problem. In the mid-I954 forecasting discussion a strong reason for optimism was found in the fact that while late-I953 and earlyI954 sales were down and inventory up, there was no substantial reduction in planned investment in plant and equipment for I954. Here is a behavior pattern that has been studied very little. But the length of the time unit used in induced-investment planning is an extremely important aspect of business behavior, for it can be shown to be crucial for the stability of macro-economic equilibrium. To show this is the purpose of the present paper.