AN OBTRUSIVE REMARK ON CAPITAL AND COMPARATIVE STATICS
We present a simple comparative statics analysis of steady-state equilibria in overlapping generations economies with capital accumulation. We regard comparative statics as paradoxical whenever an exogenous increase in saving propensity induces a decrease (an increase) in consumption at the steady state when interest rate is positive (negative). It is shown that there is an exact relation between paradoxical comparative statics and a perverse intersection of properly identified curves of demand for and supply of capital in value. The demand curve for capital in value coincides with that of neo-Ricardian analysis. We relate our conclusions to some old and recent issues in capital theory. Copyright © 2008 The Authors. Journal compilation © 2008 Blackwell Publishing Ltd.
Year of publication: |
2009
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Authors: | Bloise, Gaetano ; Reichlin, Pietro |
Published in: |
Metroeconomica. - Wiley Blackwell, ISSN 0026-1386. - Vol. 60.2009, 1, p. 54-76
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Publisher: |
Wiley Blackwell |
Saved in:
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