Tag Archives: Steady State Economics

1.0 Introduction Piero Sraffa wrote down his 'first equations' in 1927, for an economy without a surplus. D3/12/5 starts with these equations for an economy with three produced commodities. I always thought that they did not make dimensional sense, but Garegnani (2005) argues otherwise. This post details Garegnani's argument, albeit with my own notation. There are arguments about how and why Sraffa started on his research project I do not address here. The question is how did he relate...

I have a new working paper. Abstract: Does the Cambridge equation, in which the rate of profits in a steady state is equal to the quotient of the rate of growth and the savings rate out of profits, hold in an economy with widespread non-competitive markets? This article presents a multiple-good model of markup pricing in an attempt to answer this question. A balance equation is derived. Given competitive conditions, this model can be used to derive the Cambridge equation. The Cambridge...

1.0 Introduction I have sometimes set out Marx's model of expanded reproduction, only with prices of production instead of labor values. I assume two goods, a capital good and a consumption good, are produced with constant technology. If one assumes workers spend all their wages and capitalists save a constant proportion of profits, one can derive the Cambridge equation in this model. The Cambridge equation shows that, along a steady state growth path, the economy-wide rate of profits is...

Weekend thinking.Thoughts On EconomicsA Semi-Idyllic Golden AgeRobert Vienneau

1.0 Introduction This post presents a model of a steady state with a constant rate of growth in which: Total wages and total profits grow at same rate. Neutral technical change increases the productivity of labor in all industries. The wage per hour increases with productivity. Each worker continues to consume the same quantity of produced commodities. But each worker takes advantage of increased productivity to work less hours per year. In these times, when concerns about global warning...