approaches to production theory. Although marginal analysis dominates economic literature, we argue that linear programming is an … equivalent theory with some advantages and, of course, some disadvantages in comparison to marginal analysis. Marginal analysis … will be a more suitable choice if we assume continuous changes and perfect substitution in production and unlimited …

), production and indirectly also employment. In the retail market the consumer price index (CPI) is formed. We specify a simple … dynamic model with two state variables: CPI and PPI. Real variables - production and employment - are fully determined by CPI … shocks to the PPI inflation, production and employment equations. In the second part we implement the model on monthly data …