Full text: From Stagnation in the 30s to Slow Growth in the 70s.

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
	        

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