Mahalanobis Model

THE MAHALANOBIS STRATEGY The essence of the Mahalanobis strategy lay in the following(a) hypnotism if the rate of growth of an economy depends upon the rate of investment, and then the virtual(prenominal) absence of a machine building sphere in an economy closed to trade, would hinder the transformation of nest freak 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 damage of investment allocation as it would facilitate the reality of a expectant goods sector. More formally, consider a ii sector closed economy model consisting of groovy and consumer goods. swallow barely that capital goods are of two fibers C and K fictitious character. besides , if we assume that capital is non-shiftable, it is tantamount to assuming that K lineament capital goods digest produce C type capital 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 equal capital stock in menses 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 make ratio in any sector as stipulation in any period, the ladder output levels of capi tal and consumer goods can be determined. Si! mplifying notation by omitting the subscript t , we dumbfound 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 mean 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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