Page 20 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 1, 2016, pp. 4-37

The overall conclusion is: under all assumptions (particularly, the constant
nature of coefficients A and B), the monotonic increases or decreases in the share in
subset I may be justified only for the limited time intervals, when the goals are set.
These are to rapidly increasing the level of income or production levels.
A special note should be taken of the constancy of coefficients A and B. These
are in accordance with the scenario when the economy moves along the trajectory of
the balanced economic growth with no changes occurring in the economy in neither
progressive nor in recourse direction.
In overall, A. Granberg has studied the influence of coefficients A and B on
the dynamics of the ratios in the two subsets. Here, case B is possible, where (t) = b
kt
(t) А = b (0)* Ae and к > 0 (i.e. only direct capital intensity increases whilst
materials intensity remains largely unchanged).
Then, under the conditions of the constant rates of the accumulation a (t) =
the ratio of the production volumes in subset I and II remain unchanged (according
to the initial data derived from examples set by A. Granberg, these remain at 68%
and 32 %), and the rates in subsets I and II decrease in equal proportions. The
outcome is positive compared to other alternative conclusions.
If, under the conditions of the unlimited growth in the capital intensity, the rate
of consumption is maintained constant, then the share in subset I, at its final time
interval, reduces to zero. The macroeconomic dynamics, in this case, moves along
the similar trajectory, which accords with constant capital intensity and satisfies the
condition when г> . When capital intensity decreases (k<0) and constant
consumption growth rate remains unchanged, then the changes in the dynamics of
the ratios in subsets I and II move in opposite directions. In that case, the overall
picture does not change in quality compared to the changes in the development,
under the condition of constancy of coefficient B and, the condition when r< .
The changes in coefficient A time-wise impact the dynamics of the two
subsets since those cause the subsequent changes in coefficient B (because B=bА).
In particular, if A (t) = А (0) * , then, under the condition that b (t) = b and is

constant, we would have В (t) = В (0)* . At the same time, with all the above
changes, the ratios between the gross output and national income do change. The
increase in A leads to the additional increase in subset I and its share in the gross
product. The decrease in A causes the reversed changes.
Let the dynamics in the two subsets, under the constant rate of production
accumulations and A (t) = А (0) be given, where >0. The growth rates in
subset II and of the production accumulations tend to monotonously decrease to
zero, whilst the growth rates in subset I reaches its maximum. The share in subset II

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