On the Recent Debate on Capital Theory and General Equilibrium
The paper disputes the negative conclusion of prof. Mandler on the thesis by Garegnani, Schefold, Parrinello that intertemporal general equilibrium theory too is undermined by reswitching and reverse capital deepening. The paper argues that Mandler’s conclusion rests upon highly criticisable assumptions that render the equations of intertemporal general equilibrium identical to those of general equilibria without capital goods. The Walrasian treatment of the capital endowment is criticized in Part I on the basis of its insufficient persistence, and of other ‘methodological’ criticisms that are systematically surveyed. In Part II it is shown through a numerical example that Mandler’s claim, that the assumption of a single consumer guarantees uniqueness of intertemporal equilibrium independently of reswitching or reverse capital deepening, rests on the absence of production of capital goods in the last period of the equilibrium; this assumption is thus revealed to be one of the tricks that prevents the existence of capital goods from changing the properties of the equilibrium relative to those of equilibria without capital
|Date of creation:||Sep 2009|
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- Enrico Sergio Levrero & Saverio M. Fratini, 2007. "Su Mandler e la Indeterminatezza Sraffiana," Departmental Working Papers of Economics - University 'Roma Tre' 0077, Department of Economics - University Roma Tre.
- Michael Mandler, 2002. "Classical and Neoclassical Indeterminacy in One-shot Versus Ongoing Equilibria," Metroeconomica, Wiley Blackwell, vol. 53(3), pages 203-222, 08.
- Saverio M. Fratini, 2008. "Economic Generality Versus Mathematical Genericity: Activity-Level Indeterminacy And The Index Theorem In Constant Returns Production Economies," Metroeconomica, Wiley Blackwell, vol. 59(2), pages 266-275, 05.
- Michael Mandler, 2005. "Well-Behaved Production Economies," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 477-494, November.
- Quah, John K. -H., 2003. "Market demand and comparative statics when goods are normal," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 317-333, June.
- Pierangelo Garegnani, 2005. "Capital And Intertemporal Equilibria: A Reply To Mandler ," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 411-437, November.
- Ennio Bilancini & Fabio Petri, 2008. "A Comment On Gintis's "The Dynamics of General Equilibrium"," Economics Bulletin, AccessEcon, vol. 2(3), pages 1-7.
- repec:ebl:ecbull:v:2:y:2008:i:3:p:1-7 is not listed on IDEAS
- Bertram Schefold, 2005. "Reswitching As A Cause Of Instability Of Intertemporal Equilibrium," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 438-476, November.
- Pierangelo Garegnani & Antonella Palumbo, 1997. "Accomulation of capital," Departmental Working Papers of Economics - University 'Roma Tre' 0002, Department of Economics - University Roma Tre.
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