Econometrica: Oct 1956, Volume 24, Issue 4
Complementarity and Long-Range Projections
P. J. VerdoornThis article studies the implications of complementarity on the problem of the long-term forecast. The conditions for maintaining long-run equilibrium between factor demand and factor supply are derived and illustrated with the help of a three-factor model, so as to bring out the particular problem of foreign trade. Equilibrium for all of the three factors appears possible only if the parameters of the system satisfy a set of specific relations or certain policy variables are introduced. Finally the complete system as used by the Central Planning Bureau is presented, together with the numerical values chosen for the parameters.
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