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

  • Dimitrios Koumparoulis

    ()

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

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    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..

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    File URL: http://journals.univ-danubius.ro/index.php/euroeconomica/article/view/781/707
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    Article provided by Danubius University of Galati in its journal Euroeconomica.

    Volume (Year): (2011)
    Issue (Month): 27 (February)
    Pages: 27-39

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    Handle: RePEc:dug:journl:y:2011:i:27:p:27-39
    Contact details of provider: Web page: http://www.euroeconomica-danubius.ro/

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