The Finance of the Transition Phase

Alexander P. Abramov
Additional contact information
Alexander P. Abramov: Russian Academy of Sciences

Chapter Chapter 4 in Balanced and Cyclical Growth in Models of Decentralized Economy, 2014, pp 81-98 from Springer

Abstract: Abstract In this chapter, we consider the dynamics of financial indicators related to transition of decentralized economic systems to balanced growth. We show that this mode can be reached asymptotically if sectors aim at maximizing their profit when planning production. We define rules for setting prices that solve this problem. We formulate the conditions under which the payment balances of all sectors approach zero. We also consider the financial aspect of commodity credit and a mechanism of managing payment balances. We describe a pricing mechanism that allows sectors to pay off their debts. We also provide an economic interpretation of all the eigenvalues of a technology matrix. To do this, we introduce the notion of the reverse mode of a Leontief technology. This virtual mode allows us to extract, from a final product, all the resources used to produce it. When some sectors use this mode, the system receives additional resources. This allows sectors that use conventional Leontief technologies to achieve a constant expansion rate that exceeds the model’s von Neumann expansion rate.

Keywords: Expansion Rate; Balance Growth; Income Statement; Base Price; Technology Matrix (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-319-07917-2_4

Ordering information: This item can be ordered from
http://www.springer.com/9783319079172

DOI: 10.1007/978-3-319-07917-2_4

Access Statistics for this chapter

More chapters in Lecture Notes in Economics and Mathematical Systems from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().