Aggregate analysis of centrally planned economies suffers from the absence of a theoretical framework. The purpose of this paper is to supply such a framework. We develop a dynamic disequilibrium model which traces out the effects of planners' decisions. The model focuses on how current period decisions affect the development of opportunities over time. We show how cycles may develop under central planning with rational expectations and discuss some extensions.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics