volume of exports fell in some versions of the solutions by 80 percent, which hardly seems to be realistic. The repercussions for other variables (e.g., employment) also made their changes unrealistic in this set of results. Tables 12.3, 12.4, and 12.5 characterize the nature of the solutions to the models of Set I.
The basic assumptions made here differ from those underlying Set I in that the exports of any production sector are not permitted to vary from the actual 1977 levels by more than 15 percent. In addition we "changed" the consumer prices, lowering the food price by 20 percent and raising other prices: housing by 100 percent; furniture by 90 percent; health, transport, and rest each by 30 percent. The rise in the overall price index corresponding to the assumed changes is equal to 10 percent. (This is quite modest when compared with the inflation rate we have learned to live with in the 1980s.) Total employment was assumed not to exceed the actual 1977 level by more than 1 percent. Tables 12.6, 12.7, 12.8, and 12.9 illustrate the economic nature of the solutions to the models constituting Set II.
The research we have conducted so far is certainly more concerned with testing the model and with learning about its manifold possibilities than with actual data. Nevertheless it seems evident that, first, the restoration of equilibrium, although entailing some sacrifices (some price rises), is not out of the economy's reach. Yet at the same time the proposition, often overstressed, that equilibrium should be restored only through the reallocation of resources and the expansion of output (with consumer prices being kept constant) must be characterized as unrealistic. Second, it would be difficult to restore internal equilibrium in the consumer market and at the same time increase the volume of net exports, without a substantial decrease in the
Balance of Trade
|Variant of ELESb Parameters|
|aSee text for items included in each category.|
|bExtended linear expenditure system.|
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Book title: Advances in Input-Output Analysis:Technology, Planning, and Development. Contributors: William Peterson - Editor. Publisher: Oxford US. Place of publication: New York. Publication year: 1991. Page number: 179.
This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.