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Kaldorian Demand Functions And The Return To Capital: An Analysis In A Trade Theoretic Framework

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  • Manmohan Agarwal
  • Bharat R. Hazari

Abstract

. This paper shows that under certain plausible conditions capital accumulation raises the return to capital. A three good trade theoretic model with Kaldorian demand functions is used to establish this result. This proposition is also independent of the assumption of diminishing return to capital a key feature of endogenous growth theory. Our result sheds light on the high rates of investment and growth that many East Asian economies have achieved.

Suggested Citation

  • Manmohan Agarwal & Bharat R. Hazari, 2009. "Kaldorian Demand Functions And The Return To Capital: An Analysis In A Trade Theoretic Framework," Pacific Economic Review, Wiley Blackwell, vol. 14(1), pages 113-118, February.
    • Handle: RePEc:bla:pacecr:v:14:y:2009:i:1:p:113-118
    DOI: 10.1111/j.1468-0106.2009.00438.x
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    References listed on IDEAS

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    1. Nicholas Kaldor, 1955. "Alternative Theories of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(2), pages 83-100.
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