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INTERTEMPORAL COMPETITIVE EQUILIBRIUM, CAPITAL AND THE STABILITY OF TÂTONNEMENT PRICING REVISITED
Author(s) -
Parrinello Sergio
Publication year - 2005
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2005.00228.x
Subject(s) - economics , criticism , capital (architecture) , capital good , general equilibrium theory , mathematical economics , neoclassical economics , stability (learning theory) , keynesian economics , microeconomics , monetary economics , computer science , law , archaeology , public good , machine learning , political science , history
This paper reconsiders a recent criticism which contends that the theory of general intertemporal equilibrium, formulated by taking the physical endowments of capital goods as given, is not protected from the problem of capital at the centre of the two Cambridges debate of the 1960s. The author confirms such a criticism following a different approach. He argues that the stability analysis of an intertemporal equilibrium via tâtonnement must be consistent with a uniform rate of return on capital. He shows that the resulting non‐orthodox tâtonnement subverts the traditional analysis of equilibrium stability.