Skip to content

Conversation

@jose-moran
Copy link
Member

This is meant to address a bug found by Deven Azevedo from SESIT @devenaz , who noticed that firms were not properly taking into account their productivity investment needs for purchasing when buying capital inputs. This is now fixed by adding that quantity to the target capital inputs for purchasing.

In addition to this I have added a test that makes sure that when running the simulation with the price setting parameters set to 0 (meaning inflation is pushed towards 0 by preventing firms from changing prices) then we do observe positive GDP growth when setting up exogenous TFP growth.

Fix for production being constrained at initial levels even with TFP growth.

Root cause: compute_limiting_intermediate_inputs_stock() and
compute_limiting_capital_inputs_stock() calculated production limits
WITHOUT applying the TFP multiplier. These limits constrain target_production,
which capped actual production at initial levels regardless of TFP growth.

Before fix: TFP grew 1309% but production only grew 82% (12.9% efficiency)
After fix: TFP grew 843% and production grew 476% (61% efficiency)

Also fix empty array handling in SimpleTFPGrowth to prevent test failures.
jose-moran and others added 3 commits February 5, 2026 18:15
The limiting_intermediate_inputs and limiting_capital_inputs are now
TFP-scaled in set_targets() (from PR #57). This removes the duplicate
scaling in compute_production() to avoid applying TFP twice to the
limiting stock constraint. Labour scaling is kept since it's not
pre-scaled elsewhere.
Apply TFP multiplier to limiting inputs in set_targets()
Sign up for free to join this conversation on GitHub. Already have an account? Sign in to comment

Labels

None yet

Projects

None yet

Development

Successfully merging this pull request may close these issues.

1 participant