Supply multipliers in a centrally planned economy with a private sector

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    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 languageEnglish
    Pages (from-to)53-61
    Number of pages9
    JournalEconomics of Planning
    Issue number2-3
    Publication statusPublished - Jan 1987


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