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The Measurement of Prices of Production: An Alternative Approach

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  • Peter Flaschel
  • Reiner Franke
  • Roberto Veneziani

Abstract

This paper analyzes the theoretical and methodological issues related to the empirical measurement of prices of production and wage-profit curves. A number of shortcomings of the standard approach are discussed, focusing in particular on the neglect of capital stock matrices and on the empirically objectionable assumption of uniform profit rates. An alternative approach for the empirical analysis of wage-profit curves and prices of production is proposed and its main properties are investigated using a new dataset on the German economy (1991--99). It is suggested that a Leontief-Bródy approach (augmented by profit rate differentials) is more appropriate for the analysis of wage-profit curves and prices of production than the purely theoretically oriented Sraffa-von Neumann framework.

Suggested Citation

  • Peter Flaschel & Reiner Franke & Roberto Veneziani, 2012. "The Measurement of Prices of Production: An Alternative Approach," Review of Political Economy, Taylor & Francis Journals, vol. 24(3), pages 417-435, July.
    • Handle: RePEc:taf:revpoe:v:24:y:2012:i:3:p:417-435
    DOI: 10.1080/09538259.2012.701920
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    References listed on IDEAS

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    1. Peter Flaschel, 2010. "Topics in Classical Micro- and Macroeconomics," Springer Books, Springer, number 978-3-642-00324-0, November.
    2. Mueller,Dennis C., 2009. "Profits in the Long Run," Cambridge Books, Cambridge University Press, number 9780521101592.
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    Cited by:

    1. Jonathan F. Cogliano & Roberto Veneziani & Naoki Yoshihara, 2022. "Computational methods and classical‐Marxian economics," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 310-349, April.
    2. Paulo L. dos Santos & Jangho Yang, 2019. "The persistent and informative distribution of returns on capital," Economics and Business Letters, Oviedo University Press, vol. 8(3), pages 156-165.
    3. Antonio D’Agata, 2018. "Freeing long‐period prices from the uniform profit rate hypothesis: A general model of long‐period positions," Metroeconomica, Wiley Blackwell, vol. 69(4), pages 847-861, November.
    4. Jacobo Ferrer-Hernández & Luis Daniel Torres-González, 2021. "Eigenvalues and Eigenlabors: On Iliadi’s, Mariolis’, Soklis’, and Tsoulfidis’ Explanation of the Empirical Regularities in Price Curves," Working Papers 2119, New School for Social Research, Department of Economics.
    5. Flaschel, Peter & Fröhlich, Nils & Veneziani, Roberto, 2011. "The sources of profitability," MPRA Paper 30861, University Library of Munich, Germany.

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