Page 9 - Azerbaijan State University of Economics

N.Akimov., S.Baizakov., A. Oinarov., E.Utembayev: The analysis of the macroeconomic
dynamics and assessment of smart factors’ inputs to the balanced growth rates

NGDP= pp*RGDP. (A)
In the equation (А), as above, the nominal GDP is determined in current
prices, and reflects the cost of the final product. Based on the economic theory, the
cost of the final product is an alternative form of expressing the capital, i.e., in the
form of money. In the same equation (А), real GDP is determined in current prices
of the base year and reflects the physical volume of the final product. From the
perspective of the economic theory, the physical volume of the final product is an
alternative expression of capital in the form of goods.
In whole, market equilibrium equation (A) enables assessing the split between
the real and financial sectors of the national economy. In so doing, the GDP deflator
(inflation) acts as the indicator of measurement of such split between them (in statics.)
Market economy equation (А) which has been described, here, is, in fact, the
static state of the economy at a given moment in time. It evolves as the result of
competition. According to John B. Clark, ―it enables to provide a snap shot picture
of the static society in its genuine self.‖ It is not a fiction that has nothing in
common with the real world. It is the form and the method of acting in the way the
real world does within itself‖ [Clark James.,2000].
The function, analogous to the above described methods, is attributed to the
Keynesian method as well as to that of Mandell and Fleming. These methods reflect
the realistic picture of the development of the economy. Such static methods,
equipped with their commensurate standards, are helpful in analyzing the impact of
major economic laws as well as economic rules and regulations on the market
economy. They are also critical in measuring the qualitative and quantitative
indicators of the final product at any given moment in time.
These static methods are much needed for analyses of the impact of regulatory
policies on the dynamics of static standards of levels of production, employment,
income, and prices.
Such levels, according to Karl Marx, tend to change under the influence of
five (5) factors of the development of social economics: ―the population continually
increases, capital augments, the methodologies tend to constantly improve, the
process of production undergoes decentralization at large scales and, above all, the
demand increases‖[ Clark James.,2000 ].
The third part of John B. Clark‘s book is dedicated to the methods of the
analysis of the macroeconomic dynamics given that all five groups of production
factors change. What happens to the equilibrium in a static state? How do the
standard indicators in equation (A) change provided that the equation holds true for
the base year and the changes in the structure of the five groups of factors are to
occur parallel in time in the next year?

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