Formulating an objective for an economy (Q1104223)

The paper formulates a general equilibrium model of consumption and production over time, to be used for assessing the impact of technological changes on growth and the influence of the state of the economy and economic policy on innovation and modernization. The model is a usual Arrow-Debreu model, with minor changes. The utility functions are assumed to be quadratic-linear, and for computing the average demand functions it is hypothesised that the parameters of the utility functions are independent of the income. The main result is that one may define an average utility function for the economy in such a way that the equilibrium problem of the original economy can be solved as a nonlinear mathematical programming problem.