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An empirical investigation of paradoxes: reswitching and reverse capital deepening in capital theory

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  • Zonghie Han
  • Bertram Schefold

Abstract

This paper examines the empirical relevance of the capital controversy. The price model of Sraffa and the dual models of the price and quantity systems of von Neumann become the basis of the investigation. In the course of the controversy, it proved easy to construct theoretical examples which contradicted the fundamental neoclassical hypothesis of an inverse capital demand function. This paper presents empirical examples for the first time. Thiry-two input-output tables from the OECD database serve as data. As a result, one envelope is found which involves reswitching. Reverse substitution of labour or reverse capital deepening are observed in about 3.65% of tested cases: they involve at least two switchpoints. Copyright 2006, Oxford University Press.

Suggested Citation

  • Zonghie Han & Bertram Schefold, 2006. "An empirical investigation of paradoxes: reswitching and reverse capital deepening in capital theory," Cambridge Journal of Economics, Oxford University Press, vol. 30(5), pages 737-765, September.
  • Handle: RePEc:oup:cambje:v:30:y:2006:i:5:p:737-765
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    File URL: http://hdl.handle.net/10.1093/cje/bei089
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    Citations

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    Cited by:

    1. van Suntum, Ulrich, 2008. "Dynamic efficiency and reswitching," CAWM Discussion Papers 8, University of Münster, Center of Applied Economic Research Münster (CAWM).
    2. Schefold, Bertram, 2017. "The Improbability of Reswitching, the Certainty of Wicksell-Effects and the Poverty of Production Functions: The Cambridge Critique of Capital Transformed," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168104, Verein für Socialpolitik / German Economic Association.
    3. Mariolis, Theodore, 2010. "Κριτική Έκθεση του "Νόμου της Πτωτικής Τάσης του Ποσοστού Κέρδους" του K. Marx: Κατανομή Εισοδήματος, Επισώρευση Κεφαλαίου και Τεχνολογική Μεταβολή στη Μακρά Περίοδο
      [Critical Exposition
      ," MPRA Paper 22461, University Library of Munich, Germany.
    4. Ulrich van Suntum, "undated". "Dynamic Efficiency and Reswitching," Working Papers 200122, Institute of Spatial and Housing Economics, Munster Universitary.
    5. repec:eee:streco:v:42:y:2017:i:c:p:38-55 is not listed on IDEAS
    6. Miguel A. León-Ledesma & Peter McAdam & Alpo Willman, 2010. "Identifying the Elasticity of Substitution with Biased Technical Change," American Economic Review, American Economic Association, vol. 100(4), pages 1330-1357, September.
    7. Jesus Felipe & John S.L. McCombie, 2013. "The Aggregate Production Function and the Measurement of Technical Change," Books, Edward Elgar Publishing, number 1975.
    8. Zambelli, Stefano & Fredholm, Thomas & Venkatachalam, Ragupathy, 2017. "Robust measurement of national technological progress," Structural Change and Economic Dynamics, Elsevier, vol. 42(C), pages 38-55.
    9. Schefold, Bertram, 2016. "Marx, the Production Function and the Old Neoclassical Equilibrium: Workable under the Same Assumptions? With an Appendix on the Likelihood of Reswitching and of Wicksell Effects," Centro Sraffa Working Papers CSWP19, Centro di Ricerche e Documentazione "Piero Sraffa".
    10. Mariolis, Theodore & Tsoulfidis, Lefteris, 2015. "Capital Theory ‘Paradoxes’ and Paradoxical Results: Resolved or Continued?," MPRA Paper 68214, University Library of Munich, Germany.
    11. Soklis, George, 2011. "Wage-profit curves of the Finnish economy: evidence from the supply and use tables," MPRA Paper 30183, University Library of Munich, Germany.
    12. Daniele Girardi, 2017. "Old and new formulations of the neoclassical theory of aggregate investment : a critical review," UMASS Amherst Economics Working Papers 2017-03, University of Massachusetts Amherst, Department of Economics.
    13. Mariolis, Theodore & Tsoulfidis, Lefteris, 2010. "Eigenvalue distribution and the production price-profit rate relationship in linear single-product systems: theory and empirical evidence," MPRA Paper 43716, University Library of Munich, Germany.
    14. Mariolis, Theodore & Tsoulfidis, Lefteris, 2016. "Capital theory: Less is more," MPRA Paper 75923, University Library of Munich, Germany.
    15. Schefold, Bertram, 2008. "C.E.S. production functions in the light of the Cambridge critique," Journal of Macroeconomics, Elsevier, vol. 30(2), pages 783-797, June.
    16. Mariolis, Theodore & Soklis, George & Groza, Heleni, 2010. "An Input-Output Approach to the Estimation of the Maximum Attainable Economic Dependency Ratio in four European Economies," MPRA Paper 22661, University Library of Munich, Germany.

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