2013 | OriginalPaper | Buchkapitel
Estimating the ‘Missing Equations’ for Developing Countries
verfasst von : Masanori Amano
Erschienen in: Money, Capital Formation and Economic Growth
Verlag: Palgrave Macmillan UK
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This chapter will discuss how annual nominal income change is divided between output change and the price (level) change. The concept is phrased alternatively as the nominal income elasticities of output (eo) and the price level (ep), respectively, where eo+ep=1, as is shown later on. Also, the elasticities of positive fraction correspond to the intermediate situations between the two cases with which Friedman (1970) closed his macro models: quantity theory and income-expenditure theory. Quantity theory and income-expenditure theory are represented by eo = 0 and eo = 1, respectively. Here, one cannot fail to mention the concept of eo and ep in Keynes (1936, chs 20 and 21).