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Structural Economic Dynamics with a Choice of Technique: A Numerical Example

35 Pages Posted: 24 Oct 2017  

Robert L. Vienneau

Independent

Date Written: October 22, 2017

Abstract

This article illustrates the application of bifurcation analysis to structural economic dynamics with a choice of technique. A numerical example of the Samuelson-Garegnani model is presented in which technical change is introduced. Examples of temporal paths through the parameter space illustrate variations of the wage frontier. A single technique is initially uniquely cost-minimizing for all feasible rates of profits. Eventually, the technique for which coefficients of production decrease at the fastest rates is always cost-minimizing. During the transition between these positions, reswitching, the recurrence of techniques, and capital-reversing can arise. This example emphasizes the importance of fluke switch points and illustrates possible variations in the existence of Sraffa effects.

Keywords: Choice Of Technique, Structural Dynamics, Bifurcations, Switch Points, Technological Change

JEL Classification: B24, D24

Suggested Citation

Vienneau, Robert L., Structural Economic Dynamics with a Choice of Technique: A Numerical Example (October 22, 2017). Available at SSRN: https://ssrn.com/abstract=3056379

Robert Vienneau (Contact Author)

Independent ( email )

209 Maple Street
Rome, NY 13440
315-336-5417 (Phone)
315-334-4964 (Fax)

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