Volume 10, No. 3 (2007)
Most of the economists of the Austrian School use straightforward representations of the Hayekian structure of production. Even though these depictions are helpful in order to visualize the most basic features of growth and cycle theories in the Austrian tradition, a more detailed formalization is necessary in order to deal with more difficult and subtler problems. The model developed in this paper permits, in the case of a proportional goods-in-process structure, (1) to calculate the macroeconomic values characterizing all the stages of a structure in static equilibrium, (2) to illustrate a structure and to visualize the distribution of the added value between wages and interest, (3) to demonstrate a series of mathematical formulas describing the structure (and for the first time a very simple formula for the average length of a structure: λ = I(1+ i)/C), and (4) to analyze the complex dynamic changes that occur in the rates of return and the investments at different stages when the contour of a structure changes.
