Advances in Input-Output Analysis: Technology, Planning, and Development

By William Peterson | Go to book overview

12
A Planning Scheme Combining
Input-Output Techniques with a
Consumer Demand Analysis:
A Concept and Preliminary Estimates
for Poland

LEON PODKAMINER, BOHDAN WYZNIKIEWICZ,
and LESZEK ZIENKOWSKI

Much of the actual central economic planning in the socialist (centrally planned) economies has been based on input-output techniques. Apart from planning and analytical exercises that respect literally the fundamental equation X = (I - A)-1Y, many multisectoral models of resource allocation are formulated in a more relaxed way, for example as linear programming problems allowing underutilization of capacity in some industries, expansion in others. In either form the application of input-output techniques for centrally planned economies, though undoubtedly adequate in reflecting the supply side of the economics concerned, has tended to be deficient in representing the linkages to the economics' demand side. In particular, the private consumption component C of the vector of final demand Y is usually assumed to be exogenously prescribed -- and therefore may not correspond to the true notional demands implied by the circumstances. The ensuing consumer market disequilibria (shortages) may result in more than a subjective feeling of dissatisfaction with the working of the economy. Through a feedback that has been studied by many authors (see the work of Malinvaud, 1977; Muellbauer and Portes, 1978, and Podkaminer, 1986), market disequilibria may spill over into labor markets, reducing labor supply and inducing labor shortages and thereby precipitating a deterioration in production efficiency throughout the economy.

If the flexibility of wages and consumer prices is low, some degree of disequilibrium in consumer markets may be unavoidable. (Also, as developments in the market situation in Poland during the period 1980-1985 have proved, high -- but misguided -- flexibility of prices and wages may bring about accelerating inflation without substantial equilibration of the markets.) However, the structure of the "exogenously" prescribed vector of private consumption and the resulting size of the wage fund may both significantly contribute to market disequilibria.

In this chapter we try to elicit alternative policies that could have led to

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