Introduction

In this chapter we shall review two approaches to building macroeconomic models and their potential use in medium-term planning for a socialist economy. The first approach concerns a system of models built by Czerwiñski and associates at the Academy of Economics, Poznan, based on a Leontief-type dynamic multisectoral model extended by the use of demographic and econometric models of consumers' expenditures. It is aimed at simulating the planning procedures for building a 5-year plan. The second approach deals with macroeconometric W models built by Welfe and associates exemplified by the medium-size W-3 model of the Polish economy, which optionally includes a static input-output equation system. It is aimed not only at explaining the real flows in the medium term but also at simulating the alternative economic policies and revealing the imbalances of different sectors of the national economy.

A system of simulation for planning models

At the Institute of Economic Cybernetics of the Academy of Economics on Poznari, an attempt has been made to simulate the medium-term planning procedure at the central level of the economy by means of a series of interrelated models. The basic idea of the procedure is as follows.

A plan is understood to be a set of consistent paths of growth of selected variables describing the state of the economy, compatible with some accepted targets. Variables are divided into three groups: target, autonomous, and outcome variables. Autonomous paths of growth of the population and of its social and professional components are assumed. Increases of incomes in distinguished groups of the population (wages, salaries, pensions) within the planning horizon are postulated, and hence the path of growth of total income of the population, being one of the target variables, is derived. This path is split up into the path of growth of expenditures on selected groups of commodities and the path of savings. These paths are converted into the paths of growth of individual (consumption) demand for output of productive sectors.