Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Rate of profit: The rate of profit in economics measures the return on investment, calculated as profit relative to the total capital employed. It indicates the efficiency of capital use, influenced by factors like production costs, pricing, and market demand. Higher profit rates suggest better economic performance and investment opportunities._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Luigi Pasinetti on Rate of Profit - Dictionary of Arguments
Kurz I 269 Rate of profit/Pasinetti/Kurz: [In the model] the rate of profit r2 is determined only by the conditions of production of gold, whereas the conditions of production of corn concur only to determine the price of corn in terms of gold. >Accumulation/Pasinetti. If we compare this with the results obtained by Pasinetti, we see that relative prices are the same, but the rate of profit is determined only by the conditions of production of corn, whereas the conditions of production of gold concur only to determine the price of corn in terms of gold. Pasinetti was aware of the reason why the rate of profit is independent of the conditions of production of the luxury good: „The independence of the rate of profit from the conditions of production of luxury-goods is a property of all the theoretical models which use the distinction between wage- and luxury-goods In Plain words, it is due to the peculiarity that wage-goods are necessary to produce any type of goods, while luxury-goods are not. Mr. Sraffa pointed out to me that the property was first discovered by Ladislaus von Bortkiewicz.“ (pp. 85f)(1) [Pasinetti] was also conscious of the fact that if there is no physical capital, then prices are proportional to labor inputs and since labor inputs are invariant regarding changes in the consumption patterns, it should not come as a surprise that relative prices are here the same as those found by Pasinetti. Another important difference is that when workers consume only gold, the rate of profit on capital invested (gold) is constant over time, whereas when workers consume only corn the rate of profit on capital invested (corn) is a decreasing function of invested eapital. Ricardo: (…) this is the reason why Pasinetti, following Ricardo's perspective, predicts a decreasing growth rate until the stationary state is reached, whereas in this chapter we predict, with Rebelo, that the economy grows forever and if appropriate assumptions on saving and investment hold, it does so at a constant rate. Hence the differences between the model here presented and that presented by Pasinetti are clearly comprehensible within the logic of Pasinetti's model. Rebelo: If we compare the above results with the results derived by Rebelo, there is no difference between his equations and ours. Rebelo makes also an interesting remark concerning the rates of profit: „Given that [p2] is not constant, the real interest rate for Ioans denominated in capital goods ([r2]) is different from that of consumption-denominated Ioans.“ (p. 504)(2). >New Growth Theory. 1. Pasinetti, L.L., 1960. A mathematical formulation of the Ricardian system. Review of Economic Studies 27, 78-98. 2. Rebelo, S., 1991. Long run policy analysis and long run growth. Journal of Political Economy 99, 500-521. D’Alessandro, Simone and Salvadori, Neri. „Pasinetti versus Robelo. Two different models or just one?“ In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Pasinetti I Luigi L. Pasinetti Structural Change and Economic Growth: A Theoretical Essay on the Dynamics of the Wealth of Nations Cambridge 1983 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
||
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
