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- Title
KALDORIAN DEMAND FUNCTIONS AND THE RETURN TO CAPITAL: AN ANALYSIS IN A TRADE THEORETIC FRAMEWORK.
- Authors
AGARWAL, MANMOHAN; HAZARI, BHARAT R.
- Abstract
This paper shows that under certain plausible conditions capital accumulation raises the return to capital. A three good trade theoretic model with Kaldorian demand functions is used to establish this result. This proposition is also independent of the assumption of diminishing return to capital a key feature of endogenous growth theory. Our result sheds light on the high rates of investment and growth that many East Asian economies have achieved.
- Subjects
SAVINGS; DIMINISHING returns; DEMAND function; RETURN on capital employed; INVESTMENTS; EAST Asian investments
- Publication
Pacific Economic Review, 2009, Vol 14, Issue 1, p113
- ISSN
1361-374X
- Publication type
Article
- DOI
10.1111/j.1468-0106.2009.00438.x