From: Ian Wright (wrighti@ACM.ORG)
Date: Wed Sep 19 2007 - 13:51:26 EDT
Hi Fred Sorry for the delay in replying. Although your equations are simple you I do not yet see how they can be interpreted as equilibrium prices. Since the ki and Ki are given and have units of money then they themselves must be functions of the PPi. So currently your equation PPi = ki + rKi does not say very much. I'd need to see the PPi's on the RHS too. Given your suggestion that it is possible to combine equilibrium and sequential determination feel free to time subscript the PPi on the RHS; say something like: PPi(t) = f(PPi(t-1)) + r g(PPi(t-1)) where f is the function that describes how cost prices ki are related to prices of production, and g is the function that describes how stock prices Ki are related to prices of production. I think it will be easier however if we simplify and discard stocks and replace the Ki with ki. Then we can take the analysis further. Thanks, -Ian.
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