Dynamic Intersectorial Models

mathematical economic models of planning that make it possible to determine future levels of annual production and of annual capital investments (including introduction of fixed capital stock and production capacity) with regard to the interrelationships of the sectors of physical production. For each year of the planning period the level and structure of “net” final product (personal and public consumption, accumulation of working assets and state reserves, the export-import balance, and capital investments that will not increase production during the period under consideration) and the level and structure of fixed assets at the beginning of the period are assigned in the dynamic intersectorial models. In addition to coefficients of direct expenditures found in statistical intersectorial models, the dynamic intersectorial models include specific coefficients that characterize the physical-substantive structure of capital investments.

Dynamic intersectorial models are divided into balance and optimal models on the basis of the mathematical technique used. Balance dynamic intersectorial models may be represented as a system of linear equations or as linear differential equations or difference equations. Balance dynamic intersectorial models are also differentiated in terms of lag (the gap in time between beginning construction and launching the finished project into operation). Optimal dynamic intersectorial models are characterized by a defined criterion of optimality, replacement of the system of linear equations with a system of inequalities, and introduction of specific constraints for labor and natural resources.