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A note on Piketty’s Capital in the Twenty-First Century

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  • Robert Rowthorn

Abstract

Thomas Piketty’s Capital documents long-term trends in income and wealth in advanced economies. It also provides a theoretical framework for analysing the past and projecting the future. Piketty argues that the ratio of wealth to national income is on an upward trend and that this is responsible for the rising income share of wealth-owners. This note accepts Piketty’s main empirical findings but questions his interpretation. The rising income share of wealth-owners is not due to the over-accumulation of capital, as he claims, but just the opposite. There has been too little real investment. The note also considers the long-term dynamics of Piketty’s model and explores the effect of modifying his assumptions about savings behaviour. Finally, it considers the implications of rising asset prices, which are documented by Piketty but are not adequately taken into account in his theoretical analysis or projection of future trends.

Suggested Citation

  • Robert Rowthorn, 2014. "A note on Piketty’s Capital in the Twenty-First Century," Cambridge Journal of Economics, Oxford University Press, vol. 38(5), pages 1275-1284.
  • Handle: RePEc:oup:cambje:v:38:y:2014:i:5:p:1275-1284.
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    File URL: http://hdl.handle.net/10.1093/cje/beu031
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    Citations

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    Cited by:

    1. Soon Ryoo, 2016. "Inequality of Income and Wealth in the Long Run: A Kaldorian Perspective," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 429-457, May.
    2. Lilia Costabile, 2015. "A note on Piketty’s Capital in the Twenty-First Century and its critics," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(3), pages 377-385, December.
    3. Soon Ryoo, 2016. "Top Income Shares and Aggregate Wealth-Income Ratio in a Two-Class Corporate Economy," UMASS Amherst Economics Working Papers 2016-17, University of Massachusetts Amherst, Department of Economics.
    4. repec:bla:metroe:v:68:y:2017:i:4:p:927-946 is not listed on IDEAS
    5. Luca Zamparelli, 2017. "Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti-Dual’ Pasinetti Economy," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 927-946, November.
    6. José Gabriel Palma, 2014. "Has the Income Share of the Middle and Upper-middle Been Stable around the ‘50/50 Rule’, or Has it Converged towards that Level? The ‘Palma Ratio’ Revisited," Development and Change, International Institute of Social Studies, vol. 45(6), pages 1416-1448, November.
    7. Luigi Bonatti, 2016. "Anemic economic growth in advanced economies: structural factors and the impotence of expansionary macroeconomic policies," DEM Working Papers 2016/11, Department of Economics and Management.
    8. Geoffrey C. Harcourt, 2015. "Review Article of Capital in the Twenty-First Century, Thomas Piketty," Discussion Papers 2015-10, School of Economics, The University of New South Wales.
    9. Stirati, Antonella, 2016. "Piketty and the increasing concentration of wealth: some implications of alternative theories of dis-tribution and growth," Centro Sraffa Working Papers CSWP18, Centro di Ricerche e Documentazione "Piero Sraffa".
    10. Luigi Bonatti, 2017. "Land, Housing, Growth and Inequality," DEM Working Papers 2017/01, Department of Economics and Management.
    11. Yasunori Fujita, 2015. "Missing equation in Piketty’s r-g theory," Economics and Business Letters, Oviedo University Press, vol. 4(2), pages 57-62.
    12. Ugo Pagano, 2016. "Knowledge as a Global Common and the Crisis of the Learning Economy," Department of Economics University of Siena 743, Department of Economics, University of Siena.

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