## Allocation Models and their Use in Economic PlanningThree different lines of approach have contributed to the theory of optimal planning. One approach considers the problem from the view-point of a national government and its adviser, the econometrician planning speci alist. The government can, if this is thought to be desirable, stimulate investment in certain directions and discourage other economic activities. By various fiscal devices, it can influence both the total level and the distribution of investment funds over different sectors of production. Also, in many countries, a public agency plays some kind of coordinat ing role in the formulation of long-term plans for output by the enter prises sector; this may range from administrative direction in so-called centrally planned economies, to persuasion and advice in 'capitalist' economies. Accordingly, the public planner wishes to know what dis tribution of the nation's resources would be 'optimal'. This leads to the construction of various models which may be described under the general heading 'input-output type models'. This type of model has been largely developed by practitioners, among whom Sandee [B2] is probably the most outstanding and the earliest. A later, well-developed example of a model based on this approach is, for example, the Czech model by Cerny et al. [Bl]. A second approach considers the problem from the point of view of the private entrepreneur and his adviser, the manager and financial accountant. |

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### Contents

what Is EFFICIENCY? | 3 |

THE GENERALIZED INPUTOUTPUT MODEL | 9 |

INTERTEMPORAL ALLOCATION IN | 67 |

THE BALANCED GROWTH FRONTIER | 92 |

THE DYNAMIZED LEONTIEF MODEL | 105 |

FOREIGN TRADE IN THE NATIONAL ECONOMY | 116 |

THE COSTING PROBLEM | 127 |

DISCOUNTED CASH FLOW IN THE STANDARD | 136 |

INCREASING RETURNS TO SCALE | 156 |

SOME SPECIAL eVALUATION PROBLEMS | 162 |

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### Common terms and phrases

accepted projects adjustment aggregation agriculture allocation model alternative processes arise assume balanced growth capacity cgst coefficients column competing import consider consumption corresponding cost discount Discounted Cash Flow domestic production dual requirements dual restrictions dual solution dual variables dynamic economic efficiency frontier efficiency prices efficiency-prices example exogenous export limit final demand final output vector finished metal foreign exchange foreign trade full employment give rise i-type capital income industry input input-output model labour Lagrange multipliers Lagrangean Leontief model limiting prices linear linear programming matrix maximize non-negative non-produced non-zero numeraire obtain operated processes optimality conditions particular period Pipe preference function present value price structure price vector primal solution production factors production processes productive activities programming problem project value quadratic programming quasi-rent rate of interest relative result satisfy the zero Section shadow prices specific steel supply terminal capital stocks theorem tion type of capital units zero profit requirement

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Page 202 - The Simplex and Dual Method for Quadratic Programming', Operations Research Quarterly, Vol. 15 (1964), pp. 355-388.

Page 201 - Dorfman, R., Samuelson, PA, and Solow, RM, Linear Programming in Economic Analysis, McGraw Hill-Kogakusha, 1958.

Page 202 - Input-Output: An Iterative Approach to Planning', Economics of Planning, Vol. 7, No. 3 (1967), pp.

Page 202 - Chenery, HB and Clark, PG, Interindustry Economics, John Wiley and Sons, 1959.