EQUAL ORGANIC COMPOSITION OF CAPITAL AND REGULARITY

Edwin Burmeister

Metroeconomica, 2008, vol. 59, issue 3, pages 323-346

Abstract: Equal organic composition of capital (EOCC) is shown to be a necessary and sufficient condition for constant relative prices in no-joint production technologies with neoclassical production functions. It is then proved that such neoclassical technologies are regular (which implies that consumption is well behaved across steady-state equilibria). Regularity is also a necessary and sufficient condition for near aggregation (which implies an aggregate production function with all but one of the usual neoclassical properties). Except perhaps for some fluke cases, the existence of an aggregate production function with all of the usual neoclassical properties (full aggregation) requires the stronger EOCC property. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.

Date: 2008

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