A note on computing equilibria in economies with activity analysis models of production

Equilibria in economies without production can be approximated by computing fixed points of continuous functions. With production present, the functions are usually replaced by set-valued mappings and fixed-point algorithms converge slowly. Here we propose continuous functions whose fixed points are equilibria in economies whose production is modelled by a finite list of activities. The penalty is that a least-distance program must be solved at each iteraction. The approach generalizes to allow ad valorem taxes on production. Finally, analogous arguments apply to the computation of an invariant optimal vector of capital stocks.