Gosselin, Pierre and Lotz, Aïleen and Wambst, Marc (2016): How To Spend It? Capital Accumulation in a Changing World.
Preview |
PDF
MPRA_paper_71665.pdf Download (246kB) | Preview |
Abstract
In a society characterized by a multitude of heterogeneous agents and a large number of possibly immaterial, i.e. cultural, educational, etc. goods, each one having distinct social (relative price) and personal value (individual preference), we study the impact of these relative prices on capital accumulation between generations, depending on internal economic and social parameters, i.e. capital mobility, productivity, personal and social values discrepancies. We consider an arbitrary number of agents, modelled by a one-period production function and a two-period intertemporal utility. Agents live, produce and consume over one period, but optimize over two periods, so providing a stock of goods for the next generation. In period one, the inherited stock may be disposed of to enable an alternate production of goods, depending on the agent individual preferences and on the present social value of goods. This creates a dynamics in capital accumulation that depends on the evolution of social and individual values. A threshold phenomenon appears in the evolution of the stock of capital built by an agent and his heirs. Below a certain level, the initial stock will quickly fall to zero. Above, accumulation appears. This threshold strongly depends on the volatility of personal and social values. If the social values vary strongly through time, the threshold increases: stocks will depreciate faster than what it takes to rebuild them. Shocks on social values of goods can drive the stock above or below the threshold, inducing in turn a reversal in dynamics. If an agent is a forerunner, i.e. his personal values will be next period social values, a strong mobility in capital will decrease his threshold: there is a gain to innovate. When social values are an average of several groups'values, one group will ultimately dominate. Its values become society values. Its stock appreciates at the expense of others'.
Item Type: | MPRA Paper |
---|---|
Original Title: | How To Spend It? Capital Accumulation in a Changing World |
Language: | English |
Keywords: | Capital theory, Capital accumulation, Investment allocation, Two-sector models, Disaggregated capital, Take-off, Threshold effect, Intergenerational models, Cambridge capital controversy. |
Subjects: | E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General |
Item ID: | 71665 |
Depositing User: | Aileen Lotz |
Date Deposited: | 01 Jun 2016 08:22 |
Last Modified: | 28 Sep 2019 11:32 |
References: | [1] Araujo, R. Optimal Human Investment Allocation. Economics Letters, v. 85, p. 71-76, 2004. [2] Araujo, R. & Teixeira, J. Structural Change and Decisions on Investment Allocation. Structural Change and Economic Dynamics, v. 13, p. 249-258, 2002. [3] Bose, S. Optimal Growth and Investment Allocation. Review of Economic Studies, p. 456-480, 1968. [4] Edwin Burmeister, "The Capital Theory Controversy', in Critical Essays on Piero Sraffa's Legacy in Economics (edited by Heinz D. Kurz), Cambridge: Cambridge University Press, 2000. [5] Avi J. Cohen, G. C. Harcourt, "Whatever Happened to the Cambridge Capital Theory Controversies?" Journal of Economic Perspectives, 17(1), Winter 2003, 199-214. [6] Collechia, A.; Schreyer, P. Ict Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries. Review of Economic Dynamics, v. 5, p. 408-442, 2002. [7] Cummins, J.; Violante, G. Investment specific technical change in the United States (1947-2000): Measurement and macroeconomic consequences. Review of Economic Dynamics, v.5, p. 243- 284, 2002. [8] Pierangelo Garegnani, Capital in the Neoclassical Theory. Some Notes, 2008, see * Garegnani's Paper. [9] Christian Gehrke and Christian Lager, "Sraffa an Political Economy", Encyclopedia of Political Economy, Routledge 2000. [10] Greenwood, J. The role of investment specific technological change in the business cycle. European Economic Review, v. 44, p. 91-115, 2000. [11] Greenwood, J.; Hercowitz, Z.; Krusell, P. Long-run Implications of Investment-Specific Technological Change. The American Economic Review, v. 87, p. 342-362, 1997. [12] G.C. Harcourt and N.F. Laing, Capital and Growth, Harmondsworth, UK: Penguin, 1971. [13] G. C. Harcourt, Some Cambridge Controversies in the Theory of Capital. Cambridge: Cambridge University Press 1972 [14] Iglesias, F. Neutral. Investment-Specific Technical Progress and the Productivity Slowdown. Louvain Economic Review, v. 68, p. 37-49, 2002. [15] Kotlikoff, Laurence J. and Summers, Lawrence H. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation." Journal of Political Economy, Vol. 89, No. 4, (August 1981), pp. 706-732. [16] Heinz D. Kurz, "capital theory: paradoxes, The New Palgrave: A Dictionary of Economics, London and New York: Macmillan and Stockton, 1987, pp. 359-363. [17] Michael Lebowitz, 2009, "Another Crisis of Economic Theory: The Neo-Ricardian Critique", In his Following Marx: Method, Critique and Crisis, Leiden & Boston: Brill, 2009. [18] Leontief, Wassily (1953). "Domestic Production and Foreign Trade; The American Capital Position Re-Examined". Proceedings of the American Philosophical Society 97 (4): 332-349. [19] Licandro, O.; Castillo, J.; Duran, J. The Measurement of Growth under Embodied Technical Change. Louvain Economic Review, v. 68, p. 7-20, 2002. [20] Linder, S. B. An Essay on Trade and Transformation, Stockholm: Almqvist & Wicksell, 1961. [21] Andreu Mas-Colell, "Capital Theory Paradoxes: Anything Goes", in "Joan Robinson and Modern Economic Theory"(ed. by G. R. Feiwel), New York University Press, 1989 [22] Franco Modigliani, The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth, Journal of Economic Perspectives- Volume 2, Number 2-Spring 1988- Pages 15-40 [23] Bertil Ohlin, Interregional and International Trade, Cambridge, Harvard University Press, 1933 [24] Luigi L. Pasinetti and Roberto Scazzieri, "capital theory: paradoxes, The New Palgrave: A Dictionary of Economics, London and New York: Macmillan and Stockton, 1987, pp. 363-68. [25] Fabio Petri, On the Recent Debate on Capital Theory and General Equilibrium, 2009, see * Economic Department of the University of Siena. [26] Robinson J., The Production Function and the Theory of Capital, Review of Economic Studies, Vol. 21, No. 2) [27] Robinson, Joan. 1956. Accumulation of Capital, Homewood, IL: Richard D. Irwin. [28] Romer, Paul M.. 2015. "Mathiness in the Theory of Economic Growth." American Economic Review, 105(5) [29] Paul A. Samuelson (1987). "Sraffan economics" The New Palgrave: A Dictionary of Economics, v. 3, pp. 452-60. [30] Schumpeter, Joseph A. (1994) [1942]. Capitalism, Socialism and Democracy. London: Routledge. [31] Solow, Robert M. Technical Change and the Aggregate Production Function, The Review of Economics and Statistics, Vol. 39, No. 3 (Aug., 1957), pp. 312-320. [32] Joseph E. Stiglitz, "The Cambridge-Cambridge Controversy in the Theory of Capital; A View from New Haven: A Review Article" Journal of Political Economy, 82(4), Jul.-Aug. 1974: 893-903. [33] Weitzman, M. Shiftable versus non-shiftable capital: a synthesis. Econometrica, p. 511-529, 1971. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/71665 |
Available Versions of this Item
- How To Spend It? Capital Accumulation in a Changing World. (deposited 01 Jun 2016 08:22) [Currently Displayed]