Squaring the investment cycle

Kakarot-Handtke, Egmont (2011): Squaring the investment cycle.

Abstract

The present paper replaces the standard behavioral axioms by structural axioms and applies these to the analysis of the accumulation and decumulation of capital. This yields a coherent view of the interrelations of real and nominal saving–investment, of profit–loss, of money–credit, and of internal–external financing. The main result is that asymmetric growth is indispensable for the viability of the market system.

• Item Type: MPRA Paper
• Language: English
• Keywords: New framework of concepts; Structure-centric; Axiom set; Symmetric investment cycle; Asymmetric investment cycle; Flux-reflux; Real rate of interest; Nominal rate of profit; Financial profit; Nonfinancial profit; Roundaboutness
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General

References

Arrow, K. J. (1980). Real and Nominal Magnitudes in Economics. Public Interest, (Special Issue: The Crisis in Economic Theory): 139–150.

Arrow, K. J., and Hahn, F. H. (1991). General Competive Analysis. Amsterdam, New York, NY, etc.: North-Holland.

Becker, R. A. (2008). Capital Theory. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online. Palgrave Macmillan, 2nd edition. URL http://www.dictionaryofeconomics.com/article?id=pde2008_C000575.

Blanchard, O. (2000). Macroeconomics. Saddle River, NJ: Prentice Hall, 2nd edition.

Boulding, K. E. (1986). What Went Wrong with Economics? American Economist, 30(1): 5–12.

Cencini, A. (2003). IS-LM: A Final Rejection. In L.-P. Rochon, and S. Rossi (Eds.), Modern Theories of Money, pages 295–321. Cheltenham, Northampton, MA: Edward Elgar.

Gram, H. (1991). Value and Capital, Robinson Style. In I. H. Rima (Ed.), The Joan Robinson Legacy, pages 121–135. Armonk, NY, London: M. E. Sharpe.

Graziani, A. (2003). The Monetary Theory of Production. Cambridge, New York, NY, etc.: Cambridge University Press.

Harcourt, G. C. (1972). Some Cambridge Controversies in the Theory of Capital. Cambridge: Cambridge University Press.

Kakarot-Handtke, E. (2011a). Keynes’s Missing Axioms. SSRN Working Paper Series, pages 1–29. URL http://ssrn.com/abstract=1841408.

Kakarot-Handtke, E. (2011b). Primary and Secondary Markets. SSRN Working Paper Series, pages 1–26. URL http://ssrn.com/abstract=1917012.

Kakarot-Handtke, E. (2011c). Properties of an Economy Without Human Beings. SSRN Working Paper Series, pages 1–23. URL http://ssrn.com/abstract=1863788.

Kakarot-Handtke, E. (2011d). The Pure Logic of Value, Profit, Interest. SSRN Working Paper Series, pages 1–21. URL http://ssrn.com/abstract=1838203.

Kakarot-Handtke, E. (2011e). Reconstructing the Quantity Theory (I). SSRN Working Paper Series, pages 1–22. URL http://ssrn.com/abstract=1895268.

Kakarot-Handtke, E. (2011f). Reconstructing the Quantity Theory (II). SSRN Working Paper Series, pages 1–18. URL http://ssrn.com/abstract=1903663.

Kakarot-Handtke, E. (2011g). Uniform Profit Ratios. SSRN Working Paper Series, pages 1–13. URL http://ssrn.com/abstract=1906578.

Kaldor, N. (1959). Growth and the Problem of Inflation. Economica, 26(103): 212–226. URL http://www.jstor.org/stable/2550481.

Kaldor, N. (1985). Economics Without Equilibrium. Armonk, NY: M.E. Sharpe.

Keynes, J. M. (1937). Alternative Theories of the Rate of Interest. Economic Journal, 47(186): 241–252. URL http://www.jstor.org/stable/2225525.

Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.

Laidler, D. (1999). Fabricating the Keynesian Revolution. Cambridge: Cambridge University Press.

Lavoie, M. (1992). Foundations of Post-Keynesian Economics. Cheltenham: Edward Elgar.

Marshall, A. (2009). Principles of Economics. New York, NY: Cosimo, 8th edition.

Mill, J. S. (2004). On the Definition of Political Economy; and the Method of Investigation Proper to it., volume PA 18202, pages 93–125. Electronic Classic Series: Pennsylvania State University.

Minsky, H. P. (2008). Stabilizing an Unstable Economy. New York, NY, Chicago, IL, San Francisco, CA: McGraw Hill, 2nd edition.

Niehans, J. (1994). A History of Economic Theory. Baltimore, MD, London: Johns Hopkins University Press.

Robinson, J. (1953). The Production Function and the Theory of Capital. Review of Economic Studies, 21(2): pp. 81–106. ISSN 00028282. URL http://www.jstor.org/stable/2296002.

Rochon, L.-P., and Rossi, S. (2003). Introduction. In L.-P. Rochon, and S. Rossi (Eds.), Modern Theories of Money, pages xx–lvi. Cheltenham, Northampton, MA: Edward Elgar.

Schmitt, B. (1988). The Identity of Aggregate Supply and Demand in Time. In A. Barrère (Ed.), The Foundations of Keynesian Analysis, pages 169–193. Houndmills, London: Macmillan.

Seccareccia, M. (2003). Pricing, Investment and the Financing of Production within the Framework of the Money Circuit: Some Preliminary Evidence. In L.-P. Rochon, and S. Rossi (Eds.), Modern Theories of Money, pages 173–197. Cheltenham, Northampton, MA: Edward Elgar.

Shaik, A. (1980). Laws of Production and Laws of Algebra: Humbug II. In E. J. Nell (Ed.), Growth, Profits, and Property, pages 80–95. Cambridge, New York, NY, Melbourne: Cambridge University Press.

Sinn, H.-W. (1975). Das Marxsche Gesetz des tendenziellen Falls der Profitrate. Zeitschrift für die gesamte Staatswissenschaft, 131: 646–696.

Smith, A. (2008). An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Oxford University Press.

Wicksell, K. (1936). Interest and Prices. London: Macmillan.