Chapters 3 and the following one are companion chapters dealing with a mixture of the dynamic Leontief system and the Walrasian model of capital formation. However, they assume different types of production functions: neoclassical production functions in Ch. 3 and discrete ’activities’ in Ch. 4. Various effects of technological improvements and correlations among prices, wages, and the interest rate are discussed, and it is seen that an efficient balanced growth path exists. A note to Ch. 3 establishes the existence of a solution to the Walrasian equations of capital formation and credit.
Keywords: capital formation; credit; input–output; interest rates; Leontief models; Leontief's input–output system; neoclassical economics; prices; wages; Walrasian model of capital formation
Chapter. 19399 words. Illustrated.
Subjects: Economic Development and Growth
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