Exploring near-linearities in price–rate of profit trajectories and the concept of effective rank in input–output matrices

Lefteris Tsoulfidis ()

Journal of Economic Structures, 2023, vol. 12, issue 1, 1-19

Abstract: Abstract In recent years, there has been a resurgence of interest in the controversies surrounding capital theory. At the heart of these debates are the empirically observed near-linearities in the price–rate of profit and wage rate of profit curves. This article posits that these near-linearities can be attributed to the low effective rank property inherent in the economy's system matrices of input–output coefficients. This suggests that a comprehensive representation of how prices evolve in response to changes in income distribution can be achieved with only a few eigenvalues and their respective eigenvectors. Furthermore, this low-dimensional system possesses the capability to capture the majority of distinctive features that characterize the input–output structure of the economy in relation to price movements.

Keywords: Price–rate of profit trajectories; Effective rank; Vertical integration; Eigendecomposition (search for similar items in EconPapers)
JEL-codes: B24 B51 C67 D46 D57 E11 E32 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:jecstr:v:12:y:2023:i:1:d:10.1186_s40008-023-00319-6

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DOI: 10.1186/s40008-023-00319-6

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