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The Hicks-Malinvaud average period of production and 'marginal productivity': a critical assessment

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  • Saverio M. Fratini

Abstract

Malinvaud (2003) observed that once techniques are ranked according to Hick’s concept of average period for a given rate of interest, a rise in the latter entails the use of a technique with a shorter average period. After a reconstruction of Malinvaud’s argument, it is shown that the result is far less encouraging for neoclassical theory than it might seem. The most important problem is not the fact that change in the interest rate affects the average period associated with a technique, despite the concern this aroused in Hicks and Malinvaud, but rather that it affects the ranking of techniques.

Suggested Citation

  • Saverio M. Fratini, 2011. "The Hicks-Malinvaud average period of production and 'marginal productivity': a critical assessment," Departmental Working Papers of Economics - University 'Roma Tre' 0128, Department of Economics - University Roma Tre.
    • Handle: RePEc:rtr:wpaper:0128
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    References listed on IDEAS

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    1. Edmond Malinvaud, 2003. "The Legacy of Knut Wicksell to Capital Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 507-525, December.
    2. William Fellner & Howard S. Ellis, 1940. "Hicks and the Time-Period Controversy," Journal of Political Economy, University of Chicago Press, vol. 48(4), pages 563-563.
    3. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
    4. Saverio M. Fratini, 2010. "Reswitching And Decreasing Demand For Capital," Metroeconomica, Wiley Blackwell, vol. 61(4), pages 676-682, November.
    5. Burmeister,Edwin, 1980. "Capital Theory and Dynamics," Cambridge Books, Cambridge University Press, number 9780521297035.
    6. Fabio Petri, 2004. "General Equilibrium, Capital and Macroeconomics," Books, Edward Elgar Publishing, number 3438.
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    Cited by:

    1. Fratini, Saverio M., 2018. "A note on re-switching and the neo-Austrian concept of the average period of production," MPRA Paper 87306, University Library of Munich, Germany.
    2. Saverio M. Fratini, 2013. "Malinvaud on Wicksell’s Legacy to Capital Theory: Some Critical Remarks," Palgrave Macmillan Books, in: Enrico Sergio Levrero & Antonella Palumbo & Antonella Stirati (ed.), Sraffa and the Reconstruction of Economic Theory: Volume One, chapter 5, pages 105-128, Palgrave Macmillan.
    3. Saverio M. Fratini, 2019. "A note on re-switching, the average period of production and the Austrian business-cycle theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 32(4), pages 363-374, December.
    4. Peter Lewin & Nicolas Cachanosky, 2019. "Re-switching, the average period of production and the Austrian business-cycle theory: A comment on Fratini," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 32(4), pages 375-382, December.

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    More about this item

    Keywords

    Average period of production; capital; interest rate; Wicksell;
    All these keywords.

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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