A popular interpretation of the Rational Expectations/Efficient Markets hypothesis states that, if the hypothesis holds, then market valuations must follow a random walk. This postulate has frequently been criticized on the basis of empirical evidence. Yet the assertion itself incurs what we...

The Cobb-Douglas function is today one of the most widely-adopted assumptions in economic modeling, yet both its theoretical and empirical basis have long been under question. The purpose of this paper is to build an alternative production function on neoclassical microfoundations to address...

A popular interpretation of the Rational Expectations/Efficient Markets hypothesis states that, if the hypothesis holds, then market valuations must follow a random walk. This postulate has frequently been criticized on the basis of empirical evidence. Yet the assertion itself incurs what we...

Total Factor Productivity (TFP) explains around a 70% of the business cycle fluctuations , yet its traditional interpretation as technology progress is not supported by the data , nor is it clear how its serially-persistent, mean-reverting behavior reconciles with neoclassical economics. This...

The CobbDouglas function is today one of the most widely adopted assumptions in economic modeling, yet both its theoretical and empirical bases have long been under question. This paper builds an alternative function on very different (albeit also neoclassical) microfoundations aimed at both...

This paper poses the hypothesis that GDP fluctuations are better modeled by regarding capital as a “sunk cost”, whose returns constitute economic rents, than as a variable input whose price equals marginal cost, as in the basic Cobb-Douglas function. The rationale is that investments require...