The Treatment of Fixed Capital in the Long Period
This paper is concerned with the treatment of fixed capital in multisectoral models. Five approaches and concepts developed and used by Sraffa and von Neumann, by Hicks, by Georgescu-Roegen, by Walras and by Leontief are compared. These five approaches fall into two broad categories: models with finite life and endogenous determination of depreciation and models with infinite life and exogenous depreciation. Total vertical disintegration of production results in treating used fixed capital items as joint products. This approach suggested by Torrens and elaborated by von Neumann and Sraffa is the most general approach. All other models are special cases.
Volume (Year): 18 (2006)
Issue (Month): 4 ()
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