The Marginal Productivity Theory Of The Price Of Capital: An Historical Perspective On The Origins Of The Codswallop

Although it might have been expected that, by this point in time, the unacceptability of the marginal productivity theory of the return on capital would be universally agreed, that is evidently not the case. Popular textbooks still propound the dogma to the innocent. This note is presented in the hope that a succinct indication of the origins of the theory it will contribute to a more general appreciation of the unrealistic and illogical nature of this doctrine.

Productivity shocks and aggregate fluctuations in an estimated endogenous growth model with human capital

Employing an endogenous growth model with human capital, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate fluctuations in output, consumption, investment and hours. Given the importance of accounting for both the dynamics and the trends in the data not captured by the theoretical growth model, we introduce a vector error correction model (VECM) of the measurement errors and estimate the model���s posterior density function using Bayesian methods. To contextualize our findings with those in the literature, we also assess whether the endogenous growth model or the standard real business cycle model better explains the observed variation in these aggregates. In addressing these issues we contribute to both the methods of analysis and the ongoing debate regarding the effects of innovations to productivity on macroeconomic activity.

Social capital formation across space: proximity and trust in European regions

An extensive economics and regional science literature has discussed the importance of social capital for economic growth and development. Yet, what social capital is and how it is formed are elusive issues, which require further investigation. Here, we refer to social capital in terms of civic capital and good culture , as rephrased by Guiso, Sapienza and Zingales (2010) and Tabellini (2010). The accumulation of this kind of capital allows the emerging of regional informal institutions, which may help explaining diff erences in regional development. In this paper, we take a regional perspective and use exploratory space and space-time methods to assess whether geography, via proximity, contributes to the formation of social capital across European regions. In particular, we ask whether generalized trust, a fundamental constituent of social capital and an ingredient of economic development, tends to be clustered across space and over time. From the policy standpoint, the spatial hysteresis of regional trust may contribute to the formation of spatial traps of social capital and act as a further barrier to regional economic development and convergence.

Still More On Why We Should Bury The Marginal Productivity Theory Of The Price Of Capital: A Supplementary Note

The purpose of this note is to supplement the author���s earlier remarks on the unsatisfactory nature of the neoclassical account of how the return on capital is determined. (See Strathclyde Discussion Paper 12-03: ���The Marginal Productivity Theory of the Price of Capital: An Historical Perspective on the Origins of the Codswallop���). The point is made via a simple illustration that certain matters which are problematical in neoclassical terms are perfectly straightforward when viewed from a classical perspective. Basically, the marginalist model of the nature of an economic system is not fit for purpose in that it fails to comprehend the essential features of a surplus-producing economic system as distinct from one merely of exchange.

Human capital, social mobility and the skill premium

This paper develops a dynamic general equilibrium model to highlight the role of human capital accumulation of agents differentiated by skill type in the joint determination of social mobility and the skill premium. We first show that our model captures the empirical co-movement of the skill premium, the relative supply of skilled to unskilled workers and aggregate output in the U.S. data from 1970-2000. We next show that endogenous social mobility and human capital accumulation are key channels through which the effects of capital tax cuts and increases in public spending on both pre- and post-college education are transmitted. In particular, social mobility creates additional incentives for the agents which enhance the beneficial effects of policy reforms. Moreover, the dynamics of human capital accumulation imply that, post reform, the skill premium is higher in the short- to medium-run than in the long-run.

Tax smoothing in a business cycle model with capital-skill complementarity

This paper undertakes a normative investigation of the quantitative properties of optimal tax smoothing in a business cycle model with state contingent debt, capital-skill complementarity, endogenous skill formation and stochastic shocks to public consumption as well as total factor and capital equipment productivity. Our main finding is that an empirically relevant restriction which does not allow the relative supply of skilled labour to adjust in response to aggregate shocks, signi cantly changes the cyclical properties of optimal labour taxes. Under a restricted relative skill supply, the government fi nds it optimal to adjust labour income tax rates so that the average net returns to skilled and unskilled labour hours exhibit the same dynamic behaviour as under fl exible skill supply.

Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact

Micro-econometric evidence reveals high private returns to education, most prominently in low-income countries. However, it is disputed to what extent this translates into a macro-economic impact. This paper projects the increase in human capital from higher education in Malawi and uses a dynamic applied general equilibrium model to estimate the resulting macroeconomics impact. This is contingent upon endogenous adjustments, in particular how labour productivity affects competitiveness and if this in turn stimulates exports. Choice among commonly applied labour market assumptions and trade elasticities results in widely different outcomes. Appraisal of such policies should consider not only the impact on human capital stocks, but also adjustments outside the labour market.

Debunking Mill���s ���Fourth Fundamental Proposition on Capital���

J S Mill���s enigmatic "Fourth Proposition on Capital" has been brought to our notice by Steven Kates (2015). Kates takes a positive view of the proposition. Our focus is not, however, on Kates, but on the aforesaid proposition. The purpose of this paper is to demonstrate, via close examination of Mill���s explanatory examples, just how unsatisfactory are its foundations. We conclude that the doubters are justified: Mill���s Fourth Proposition is, demonstrably, a muddle.

Natural Capital's perception by Kodagu communities: a comparative study (Karnataka, India)

When we ask ourselves about a concrete definition of ���Natural Capital��� we can find a large and wide range of conceptions, which are attached to it. These can turn out to be confusing and contradictory in some cases. In theory, through books and different studies we know natural resources are composed by all the natural actives originated by the nature itself. Besides, these conform a patrimony for society as them are translated into a path towards economy: The Natural Capital. May not the Natural Capital be an easy conception to put in terms of economy it turns out to be an important capacitor for economy growth in most countries. In any case, we can clearly distinguish two ways as Natural Capital can be seen. One may elaborate a definition about it by reading what others have previously written, those who usually are quite far from the direct use of natural resources. On the other hand it would also be interesting to conform a definition of it by asking people who are constantly in contact with natural resources and consequently contribute to form the Natural Capital.

Human capital spillovers, productivity and regional convergence in Spain

This paper analyses the differential impact of human capital, in terms of different levels of schooling, on regional productivity and convergence. The potential existence of geographical spillovers of human capital is also considered by applying spatial panel data techniques. The empirical analysis of Spanish provinces between 1980 and 2007 confirms the positive impact of human capital on regional productivity and convergence, but reveals no evidence of any positive geographical spillovers of human capital. In fact, in some specifications the spatial lag presented by tertiary studies has a negative effect on the variables under consideration.

��A qu�� responde la doctrina de la libre circulaci��n internacional de capitales y del ���libre mercado de empresas���?

La liberalizaci��n mundial de la circulaci��n de capitales se ha defendido y se ha convertido en un dogma mundial con el argumento de que es algo bueno especialmente para los pa��ses menos desarrollados. Y la dram��tica crisis financiera de 2008 no ha hecho cambiar substancialmente el fondo de este dogma. En s��ntesis, ��ste reza que la libre circulaci��n de capitales facilita las inversiones extranjeras en pa��ses en desarrollo o simplemente pobres, por lo que aumentar�� el total de inversiones reales en los mismos, y, por tanto, su desarrollo econ��mico. Sin embargo, la principal consecuencia de tal liberalizaci��n ha sido y es un gigantesco movimiento especulativo diario de capitales para la compra-venta de activos financieros ���y empresas rentables- en cualquier pa��s. Y no especialmente para inversiones propiamente dichas, en activos reales como bienes de equipo e instalaciones productivas o en infraestructuras.

Relationship between technological progress, capital elasticity and emissions of industrial pollutants for the production sectors in Catalonia

As is known, the Kyoto Protocol proposes to reinforce national policies for emission reduction and, furthermore, to cooperate with other contracting parties. In this context, it would be necessary to assess these emissions, both in general and specifically, by pollutants and/or among productive sectors. The object of this paper is precisely to estimate the polluting emissions of industrial origin in Catalonia in the year 2001, in a multivariate context which explicitly allows a distinction to be made between the polluter and/or the productive sector causing this emission. Six pollutants considered, four directly related to greenhouse effect. A multi-level model, with two levels, pollutants and productive sectors, was specified. Both technological progress and elasticity of capital were introduced as random effects. Hence, it has been permitted that these coefficients vary according to one or other level. The most important finding in this paper is that elasticity of capital has been estimated as very non-elastic, with a range which varies between 0.162 (the paper industry) and 0.556 (commerce). In fact, and generally speaking, the greater capital the sector has, the less elasticity of capital has been estimated. Key words: Kyoto protocol, multilevel model, technological progress

Is the Spanish Inheritance and Gift Tax incompatible with the free movement of workers and capital?: The reasoned opinion of the EU Commission IP/10/513

The aim of my speech is answering to the question if the Spanish Inheritance and Gift Tax is incompatible with the free movement of workers and capital. We are going to pay special attention to the European Commission���s request to Spain to change its Inheritance and Gift Tax provisions for Non-Residents or Assets held abroad. In order to answer to the question mentioned above five points will be explained. At first place I am going to describe the infrengement procedure established in the Article 258 that the EU Commission can follow when a Member State doesn���t comply with Community Law. At second place, we are going to explain what is the content of the EU Commission delivered on 5th of may 2010 regarding the spanish Inheritance and Gift Tax. Then, we will analise what establishes the Community Law regarding the freedom of workers and capital and how they are understood by the EU Court of Justice in similar cases. Finally, we are going to provide possible amendments that Spain could undertake.

Soporte geoespacial para modelos de distribuci��n de especies (I): generalizaci��n del mapa de vegetaci��n del Montseny apoyada en informaci��n de im��genes de sat��lite

Los mapas de vegetaci��n son a menudo utilizados como proxis de una estratificaci��n de h��bitats para generar distribuciones geogr��ficas cont��nuas de organismos a partir de datos discretos mediante modelos multi-variantes. Sin embargo, los mapas de vegetaci��n suelen ser poco apropiados para ser directamente aplicados a este fin, pues sus categor��as no se concibieron con la intenci��n de corresponder a tipos de h��bitat. En este art��culo presentamos y aplicamos el m��todo de Agrupamiento por Doble Criterio para generalizar un mapa de vegetaci��n extraordinariamente detallado (350 clases) del Parque Natural del Montseny (Catalu��a) en categor��as que mantienen la coherencia tanto desde el punto de vista estructural (a trav��s de una matriz de disimilaridad espectral calculada mediante una im��gen del sat��lite SPOT-5) como en t��rminos de vegetaci��n (gracias a una matriz de disimilaridad calculada mediante propiedades de vegetaci��n deducidas de la leyenda jer��rquica del mapa). El m��todo simplifica de 114 a 18 clases el 67% del ��rea de estudio. A��adiendo otras agregaciones m��s triviales basadas exclusivamente en criterios de cubierta de suelo, el 73% del ��rea de estudio pasa de 167 a 25 categor��as. Como valor a��adido, el m��todo identifica el 10% de los pol��gonos originales como an��malos (a partir de comparar las propiedades espectrales de cada pol��gono con el resto de los de su clases), lo que implica cambios en la cubierta entre las fechas del soporte utilizado para generar el mapa original y la imagen de sat��lite, o errores en la producci��n de ��ste.