A
8b
r V Ü- \
<K'
y
Equation (10) now becomes
(1 jj- ) ( u - u Q ) y* =
Y*
JL
(11)
This is again an implicit multiplier equation.
The term on the right hand side can be regarded as
aj/d index of the growth of capital, if capacity is assumed
to grow in proportion to capital ( Harrod’s neutrality ).
The implicit multiplier is the distribution parameter
( 1 -
JL
) which is the ratio of profit to price
the profit margin - in the various lines of production;
this is multiplied by the utilisation rate and weighted
by the products’ share in the total capacity.
Equation (11) says nothing about how the growth rate
I + C
is determined. To start with it is assumed to
Y*
be given by the rate of innovations and by a kind of
self-perpetuating force of the long run growth in the past.
The equation (11) should serve to illustrate the role
of the distribution parameters.
If some of the gross profit margins ( mark-ups ) increase,
given the growth rate of the capital, then some of the
utilisation rates will have to decrease in relation to
the break-even point u q . But the break-even point will
itself also have to decrease, as can be seen from
'■£ \ gross
equations (4) and (8)./unless the increase in profit margins
is compensated by a rise in fixed cost as a ratio of
capacity:
( 1 - — ) u
a
W
(12)
Thus as long as the increase in gross profit margins