Cyclical Growth in Decentralized Economies

Alexander P. Abramov
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Alexander P. Abramov: Russian Academy of Sciences

Chapter Chapter 7 in Balanced and Cyclical Growth in Models of Decentralized Economy, 2014, pp 141-168 from Springer

Abstract: Abstract In this chapter, we show that, in a model of a decentralized economic system that uses Leontief technologies and whose technology matrix is primitive, cyclicity can be present, starting from a certain time period. In general, this cyclicity concerns the dynamics of normalized variables only. We present a planning algorithm that leads to cyclicity. This algorithm complies with one of the main principles of the market economy: Economic agents enjoy complete economic autonomy. In this algorithm, all sectors are completely independent in terms of decision making and do not exchange any information when preparing initial plans. We study indicators related to the cyclical dynamics of the system. We also consider the relation between the von Neumann ray and the trajectory of the system. We give a description of the cyclical dynamics of dual variables. We formulate a criterion that determines whether or not the volume of output per cycle grows. We also consider a model of an economic system where cyclicity is generated by the dynamics of its production capacities.

Keywords: Technology Matrix; Frobenius Vector; Steady-state Trajectory; Frobenius Eigenvalue; Minimum Diagonal Element (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-319-07917-2_7

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DOI: 10.1007/978-3-319-07917-2_7

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