tag:blogger.com,1999:blog-26706564.post3017975416459025958..comments2020-03-24T11:05:18.939-04:00Comments on Thoughts On Economics: Influence Of Tastes On PricesRobert Vienneauhttp://www.blogger.com/profile/14748118392842775431noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-26706564.post-41867220296306552262007-08-02T05:14:00.000-04:002007-08-02T05:14:00.000-04:00The NS Thm does not hold under the case of joint p...The NS Thm does not hold under the case of joint production.<BR/><BR/>The NS Thm holds if there is no joint production, CRS, and only one non-produced input (e.g., "labor"). The composition or level of <I>consumer</I> demand has no effect on solution to price equations. But the solution depends on distribution, as well as the technology available. (I deliberately leave out the word "change"; the points of the islands metaphor is to emphasize transition paths are not being analyzed.)<BR/><BR/>Under the case of joint production, the level and composition of consumer demand affects the steady-state prices. But, right, one does not get demand functions.<BR/><BR/>Yes, under various conditions, apparently the Input/Output matrices can be non-square if the GR does not hold.Robert Vienneauhttps://www.blogger.com/profile/14748118392842775431noreply@blogger.comtag:blogger.com,1999:blog-26706564.post-54608645061061080942007-07-30T21:38:00.000-04:002007-07-30T21:38:00.000-04:00Thanks!So correct me if I got this wrong:NS Thm ho...Thanks!<BR/><BR/>So correct me if I got this wrong:<BR/><BR/>NS Thm holds, no joint production:<BR/>Prices determined by technological coefficients, quantities determined by demand. So it's the opposite of the classical dichotomy (MV=PY + QT and all that). A change in composition (or level) of demand has no effect on prices but only on the composition of output produced. Which is what makes this truly "Keynesian".<BR/><BR/>NS Thm holds, joint production:<BR/>Both prices and quantities can be affected by both demand and technological considerations but there's no monotonic relationship between'em. So if demand for some good/factor rises it may not be the case that the price (quantity too?) of that good will rise. Hence it makes no sense to talk of scarcity in the neoclassical sense.<BR/><BR/><BR/><I>As I understand it, however, it is a theorem that the input-output matrices are square under this golden-rule condition.</I><BR/><BR/>Golden-rule = wages consumed, profits invested, like in VN, right? But this paragraph is a bit confusing. Are you saying that the i/o matrices are guaranteed to be square under the GR, and only possibly square without it?<BR/><BR/>Also, I’d say that the Neoclassicals would consider the case of constant coefficients to be a special case of CRS, not equivalent to it. Of course under the assumptions of the NS Thm it might be equivalent. (Again, I’m saying this in the hope of being corrected, not as a statement of fact). (Actually maybe not – you could have just one non-productible input, labor, but have fixed costs, to be paid in terms of labor, which would generate IRS... uh, I guess that would be the non constant coefficient of 0 then something positive though)YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.com