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Ricardo Was Right!

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  • Samuelson, Paul A

Abstract

Ricardo added a chapter, "On Machinery," to the third and last edition of his Principles. In it, he contended that invention of machinery could reduce the demand for labor, wages, and national income. This paper is devoted to the analytical questions of whether Ricardo was right that viable invention can reduce the total of real output after all competitive prices adjust to clear all markets, and why so many mainstream economists doubt Ricardo. After a defense of Ricardo's analysis, the political and ideological aspects of the historical discussions are evaluated. Mathematical proofs are provided in an appendix. Copyright 1989 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Samuelson, Paul A, 1989. " Ricardo Was Right!," Scandinavian Journal of Economics, Wiley Blackwell, vol. 91(1), pages 47-62.
  • Handle: RePEc:bla:scandj:v:91:y:1989:i:1:p:47-62
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    References listed on IDEAS

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    1. Lucas, Robert Jr., 1982. "Interest rates and currency prices in a two-country world," Journal of Monetary Economics, Elsevier, pages 335-359.
    2. Eichengreen, Barry, 1988. "Real exchange rate behavior under alternative international monetary regimes : Interwar evidence," European Economic Review, Elsevier, vol. 32(2-3), pages 363-371, March.
    3. Allan Drazen & Elhanan Helpman, 1987. "Stabilization with Exchange Rate Management under Uncertainty," NBER Working Papers 2268, National Bureau of Economic Research, Inc.
    4. Rudiger Dornbusch & Jeffrey A. Frankel, 1987. "The Flexible Exchange Rate System: Experience and Alternatives," NBER Working Papers 2464, National Bureau of Economic Research, Inc.
    5. Frankel, Jeffrey A., 1986. "The implications of mean-variance optimization for four questions in international macroeconomics," Journal of International Money and Finance, Elsevier, vol. 5(1, Supple), pages 53-75, March.
    6. Meese, Richard A. & Rogoff, Kenneth, 1983. "Empirical exchange rate models of the seventies : Do they fit out of sample?," Journal of International Economics, Elsevier, pages 3-24.
    7. Marianne Baxter & Alan C. Stockman, 1988. "Business Cycles and the Exchange Rate System: Some International Evidence," NBER Working Papers 2689, National Bureau of Economic Research, Inc.
    8. Helpman, Elhanan, 1981. "An Exploration in the Theory of Exchange-Rate Regimes," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 865-890, October.
    9. Allan Drazen & Elhanan Helpman, 1987. "Stabilization with Exchange Rate Management," The Quarterly Journal of Economics, Oxford University Press, vol. 102(4), pages 835-855.
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    Cited by:

    1. Piva, Mariacristina & Vivarelli, Marco, 2017. "Technological Change and Employment: Were Ricardo and Marx Right?," IZA Discussion Papers 10471, Institute for the Study of Labor (IZA).
    2. Freni, Giuseppe & Salvadori, Neri, 2016. "Ricardo on Machinery: A Textual Analysis," MPRA Paper 73427, University Library of Munich, Germany.
    3. Mariacristina Piva & Marco Vivarelli, 2017. "The employment impact of R&D expenditures and capital formation," DISCE - Quaderni dell'Istituto di Politica Economica ispe0078, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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