Abstract
A simple model of a centrally planned economy is developed with a state sector and private sector, and with a supply constraint affecting state sector output. In such a model, a supply multiplier can be derived under the same conditions which would make an increase in state sector prices an effective means of reducing shortage. Moreover, a one-sector constrained equilibrium model of the state sector does not yield misleading results by ignoring the private sector; and the private sector price level is a reliable indicator of shortage in the economy. © 1987 The Centre for Russian and East European Studies.
Original language | English |
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Pages (from-to) | 53-61 |
Number of pages | 9 |
Journal | Economics of Planning |
Volume | 21 |
Issue number | 2-3 |
DOIs | |
Publication status | Published - Jan 1987 |