The Hicks-Malinvaud average period of production and ‘marginal productivity’: a critical assessment

Malinvaud (2003) observed that once techniques are ranked according to Hick’s concept of average period for a given rate of interest, a rise in the latter entails the use of a technique with a shorter average period. After a reconstruction of Malinvaud’s argument, it is shown that the result is far less encouraging for neoclassical theory than it might seem. The most important problem is not the fact that change in the interest rate affects the average period associated with a technique, despite the concern this aroused in Hicks and Malinvaud, but rather that it affects the ranking of techniques.Average period of production, capital, interest rate, Wicksell.

Reswitching and Decreasing Demand for Capital in a Model with a Continuum of Linear Techniques

We consider a model of production with a continuum of linear techniques and examine the related choice of technique and shape of the demand for capital schedule. The primary conclusion regards the possibility of a decreasing demand for capital schedule combined with reswitching and reverse capital deepening.Production, continuum linear techniques.

RESWITCHING AND DECREASING DEMAND FOR CAPITAL

We consider a model of production with a continuum of linear techniques and examine the related choice of technique and shape of the demand for capital schedule. The primary conclusion regards the possibility of a decreasing demand for capital schedule combined with reswitching and reverse capital deepening.Capital Theory, Linear Activities of Production, Theory of Value

A remark on the supposed equivalence between complete markets and perfect foresight hypothesis

We consider a sequential equilibrium model over two periods, during the first of which agents have perfect information and their expectations are formed as if there were complete future markets. We show that, in the second period, equilibrium prices may well be different from those expected, without any unexpected change having occurred. This result highlights a lack of correspondence between the perfect foresight hypothesis and that of complete markets.Arrow-Debreu equilibrium, Complete markets, Sequential equilibrium, Perfect foresight, Indeterminacy

Alcune osservazioni sulla forma delle curve di domanda e offerta di capitale

ABSTRACT Some Remarks on the Shape of the Capital Demand and Supply Curves. The present paper is aimed at discussing some results concerning the choice of techniques and the capital theory in order to shed some light on aspects that might cause, and sometimes caused, a misunderstanding. We will show, in particular, that the shape of the demand for capital schedule does not, in general, reveal the presence (or the lack) of phenomena like reverse capital deepening and reswitching. The erroneous belief that the shape of the demand for capital schedule alone were sufficient to foresee possible instability problems seems to come from a conception of capital supply as a given value magnitude, as it is in Wicksell. Therefore, we will argue for the advisability of keeping the difficulties concerning the demand for capital side apart from those concerning its supply side. A method allowing this separation is also provided. Alcune Osservazioni sulla Forma delle Curva di Domanda e Offerta di Capitale. In questo scritto si discutono alcuni risultati riguardanti la scelta delle tecniche e la teoria del capitale con lo scopo di far chiarezza su certi aspetti che potrebbero prestarsi, e talvolta si sono prestati, a fraintendimenti. Si mostrerà, in particolare, che la forma della curva della domanda di capitale in valore non è, in generale, rivelatrice della presenza o meno dei fenomeni di inversione dell’intensità capitalistica e ritorno delle tecniche. L’erroneo convincimento che il solo andamento della curva di domanda di capitale sia sufficiente per prevedere possibili problemi di instabilità sembra derivare da una concezione dell’offerta di capitale come un dato ammontare di valore, come in Wicksell. Così, si sosterrà l’opportunità di tenere distinte le difficoltà riguardanti il lato della domanda di capitale, da quelle riguardanti il lato dell’offerta. Si proporrà inoltre un metodo che consenta di isolare le prime.

La rendita assoluta di Marx e le equazioni di prezzo di Sraffa

In questo scritto si discutono tre questioni relative alla teoria della rendita assoluta: 1) una possibile reinterpretazione delle ipotesi che Marx pone alla base della sua teoria della rendita assoluta; 2) le differenze tra la rendita assoluta e la rendita da monopolio; 3) la possibilità di concepire la rendita assoluta in modo tale da poterne tener conto nella determinazione dei prezzi relativi attraverso il sistema di equazioni di Sraffa.

Theories of value and ultimate standards in Sraffa's notes of summer 1927

The group of manuscripts titled 'Notes/London, Summer 1927/Physical real costs, etc.' (D3/12/3) is recognized as extremely important for the reconstruction of the evolution of Sraffa's thought after the articles published in 1925 and 1926. The present paper is aimed at analysing some relevant passages and ideas expressed by Sraffa in those manuscripts. We shall focus, in particular, on Sraffa's arguments about the existence of two different theories of value, with different aims: one aimed at determining the value of large aggregates of commodities, such as the national product, the necessary consumption and the social surplus, and the other aimed at determining the price of a single commodity, separately from the others. In Sraffa's view, if the values of many commodities are to be determined simultaneously, then the theory cannot dispense with an ultimate standard of value. That idea led Sraffa toward the conception (or the rediscovery) of the physical real cost

RESWITCHING AND DECREASING DEMAND FOR CAPITAL

We consider a model of production with a continuum of linear techniques and examine the related choice of technique and shape of the demand for capital schedule. The primary conclusion regards the possibility of a decreasing demand for capital schedule combined with reswitching and reverse capital deepening

A note on re-switching and the neo-Austrian concept of the average period of production

The neo-Austrian average period of production is calculated by taking the shares of costs referable to each period out of the total amount of costs as weights. Once this notion had been introduced, its inverse relationship with the rate of interest prompted some scholars to believe that it could serve as a good measure of capital intensity. As will be shown, however, this new average period poses some problems. On the one hand, the inverse relationship mentioned above does not preclude the re-switching of production methods. On the other, if re-switching occurs, the most roundabout method may paradoxically be the one that gives the smallest net output per worker. This result can affect the revival of the Austrian business-cycle theory

Neoclassical theories of stationary relative prices and the supply of capital

In the traditional versions of the neoclassical theory of value and distribution, the stock of existing capital—understood as either an amount of value or an endowment of capital goods—was taken as given, together with the available quantities of labour and natural resources. This characteristic of the early neoclassical theories is analysed by the comparison with the modern neo-Walrasian models of stationary equilibrium, in which the stock of capital is not considered among the data. We show that the attempt to put capital on the same footing as labour and land—i.e. to present it as a factor of production—led the early neoclassical author to write the zero netaccumulation condition, which was required by the stationarity of relative prices, in the form of a market clearing condition between supply of and demand for capital. The rate of interest was then understood as the price to determine by this market. However, as is well known, the conception of capital as a factor of production—and of the rate of interest as the price for its use—did not work and involved several problems, some of which are discussed in this paper