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  • Group B Group B:: 2. Basic Structure of The Model in Continuous Time 2. Basic Structure of The Model in Continuous Time

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    Thien Ho
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    This document discusses the 3x3 model, which is a dynamic accounting model that examines the relationship between three main variables: the growth rate of capital stock (k), non-capital expenditures as a share of capital stock (z), and the labor share of income (l). It presents the basic structure of the model in continuous time, examines the partial derivatives and stability conditions, and briefly discusses the model in discrete time. The partial derivatives analysis the impact of alternative hypotheses on growth and distribution, and identifies conditions for the system to be locally stable.

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    This document discusses the 3x3 model, which is a dynamic accounting model that examines the relationship between three main variables: the growth rate of capital stock (k), non-capital expenditures as a share of capital stock (z), and the labor share of income (l). It presents the basic structure of the model in continuous time, examines the partial derivatives and stability conditions, and briefly discusses the model in discrete time. The partial derivatives analysis the impact of alternative hypotheses on growth and distribution, and identifies conditions for the system to be locally stable.

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    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    Download as pdf or txt
    13 views4 pages

    Group B Group B:: 2. Basic Structure of The Model in Continuous Time 2. Basic Structure of The Model in Continuous Time

    Uploaded by

    Thien Ho
    This document discusses the 3x3 model, which is a dynamic accounting model that examines the relationship between three main variables: the growth rate of capital stock (k), non-capital expenditures as a share of capital stock (z), and the labor share of income (l). It presents the basic structure of the model in continuous time, examines the partial derivatives and stability conditions, and briefly discusses the model in discrete time. The partial derivatives analysis the impact of alternative hypotheses on growth and distribution, and identifies conditions for the system to be locally stable.

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    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 4

    12/20/2011

    CONTENTS
    1.Whatis3x3model? 2.Basicstructureofthemodelincontinuoustime 3.Partialderivativesofthemodel&stability conditions di i 4.Themodelindiscretetime

    GROUPB: GROUPB
    HoVietThien VuTranQuoc Huy NguyenThanhQuynhNhu PhamThiThuChinh NguyenPhanAiNhi

    1.Whatis3x3model?

    1.Whatis3x3model?

    2.Basicstructureofthemodelin continuoustime
    TheSimpleModelofDemandLed GrowthandIncomeDistributionofNelsonH. BarbosaFilho isthedynamicalaccountingmodelfor therelationshipbetween3mainvariables: k:growthrateofthecapitalstock, z:noncapitalexpenditures/capitalstock l:thelaborshareofincome

    2.Basicstructureofthemodelin continuoustime
    Output/capital=capitalgrowthrate+noncapital expenditures/capital Thechangeofcapitalgrowthrate: Thechangeofnoncapitalexpenditures/ p capital: Theacceleratorfandacanbecalculatebyoutput/capital andlaborshare: f=f(u,l)anda=a(u,l) 2x2 model

    (wherelisagiven constant)

    12/20/2011

    2.Basicstructureofthemodelin continuoustime
    Iflaborshareisalsoavariabletocount,thenwehave:
    listhechangeoflaborshare w:growthrateofrealwage th t f l b:growthrateoflaborproductivity

    2.Basicstructureofthemodelin continuoustime
    k:Thegrowthrateof capitalstock k:Thechangeofk z:noncapital/capital z:Thechangeofz g l:laborshareof income l:Thechangeofl f:thegrowthratesofcapitalexpenditures a:noncapitalexpenditures w:realwage b:laborproductivity

    w,balsocalculatebycapacityutilization(u)andincome distribution(laborshare): w=w(u,l)andb=b(u,l)

    3.Partialderivativesofthemodel &stabilityconditions
    Analyzetheimpactofalternativeeconomic hypothesesongrowthanddistribution TheJacobian matrixofthesystemaboutthis pointis

    3.Partialderivativesofthemodel &stabilityconditions

    (k*,z*,l*) : nontrivial equilibrium point - nontrivial means a point where the three state variables are positive. fu: The impact of the output-capital ratio on the growth rates of capital expenditures (fu>0) fl: The impact of the labor share of income on the growth rates of capital expenditures (fl<0) au: The impact of the output-capital ratio on non-capital expenditures (au<0)

    3.Partialderivativesofthemodel &stabilityconditions

    3.Partialderivativesofthemodel &stabilityconditions
    The33dynamicalsystemislocallystableif allofthefollowingconditionsaresatisfied 1.

    al: The impact of the labor share of income on non-capital expenditures (al>0) wu: The impact of the output-capital ratio on real wage (wu>0) bu: The impact of the output-capital ratio on labor productivity (bu>0) wl: The impact of the labor share of income on real wage- negative function (wl < 0) bl: The impact of the labor share of income on labor productivity (bl>0)

    k*,z*,l*>0

    au <0

    (wl bl)<0

    Itisvalidas long as the accelerator effect of capacity utilization on investment fu is not too strong.

    12/20/2011

    3.Partialderivativesofthemodel &stabilityconditions
    2.

    3.Partialderivativesofthemodel &stabilityconditions
    3.

    <0

    >0

    Thisconditiondependsonthekindof economy

    Thethirdstabilityconditionisdifficultto simplifyortranslateintoeconomicterms

    4.Themodelindiscretetime

    4.Themodelindiscretetime

    4.Themodelindiscretetime

    4.Themodelindiscretetime

    12/20/2011

    References
    BarbosaFilho,NelsonH.,2004,Brazil:Instituteof Economics,FederalUniversityofRiodeJaneiro (IE/UFRJ),SupplySideEconomics3X3Model,[pdf] Availablethrough <http://www.anpec.org.br/revista/vol5/vol5n3p117_15 4.pdf>[AccessDecember11th,2011] 2. Solutionsofsystemoflinearequations,[online image]Availableat <http://schoolnet.vn/georoot/Images/Toan11/L11_nc _Ch2_Bai3/L11_nc_Ch2_Bai3_hinh58.jpg>[Accessed December18th,2011]
    1.

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