Interindustry model of planned technological-structural changes (Q1286300)

This article applies mathematical modeling to plan technology changes for increased production efficiency. The focus is the high inflation environment in the Ukraine in 1992-94. An interindustry aggregated balance model issued as a tool for analyzing and planning technological-structural change. The model used is \(n\) aggregated industries with a direct input matrix \(A\). It is assumed that labor cost is a linear function of production. Standard relationships are developed in terms of the labor costs, the net, and gross production quantities. The model then seeks to determine changes in the input matrix, \(A\), and the labor costs that will maximize the overall real consumer income without triggering inflationary forces. The authors test an 18 industry version of the model using data from the Ukraine. They conclude that the model can be used to predict the main directions of impacts. More detailed models and analysis are required to refine these predictions including the development of a database of information to support the models.