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The Proportionality Hypothesis in Capital Theory: an Assessment of the Literature

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  • Dimitrios Koumparoulis

    (Democritus University of Thrace, Faculty of International Economic Relations and Development)

Abstract

It is found that the hypothesis of a constant replacement investment capital stock ratio has several fundamental shortcomings. It conflicts with most of the available theoretical and empirical evidence. It is alien to researchers in other fields of economics and related areas; and, perhaps most importantly, it has restrained progress in economic theory and econometric applications based on more realistic conceptualizations of the time structure of capital. On these grounds it is concluded that its abandonment is long overdue..

Suggested Citation

  • Dimitrios Koumparoulis, 2011. "The Proportionality Hypothesis in Capital Theory: an Assessment of the Literature," EuroEconomica, Danubius University of Galati, issue 27, pages 27-39, February.
    • Handle: RePEc:dug:journl:y:2011:i:27:p:27-39
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    File URL: http://journals.univ-danubius.ro/index.php/euroeconomica/article/view/781/707
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    References listed on IDEAS

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