8b
Equation (10) now becomes
( 1 - "jj u ' u °
Y*
<• V h
*\r%\ C /I \ X k
This is again an implicit multiplier equation.
, i* jj j ♦ .j* ^ ^ <T '.fV vS in t-"', ^ ’ A f ^ *
The term on the right hand side can be regarded as
(11)
am 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 - ) which is the ratio of profit to price
ft
the profit margin - in the various lines of production;
this is (multiplied by the utilisation rate/and)weighted
by the pr-oduets' share in the total capac
_ itVi? A^^t- Co? ■'ir^e r *s
Equation (11) says nothing about how the growth rate
I + C
Y*
is determined. To start with it is assumed to
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 f ixled cost as a ratio of 'JUyUtA.
ompensÄted by
zi^,(A u/U capercrrty t•;v
( 1 - — ) u
/3,
(12)
Aq*
Thus as long as the increase in gross profit margins^
\jf ^ * * pp
sfc&f tj I /