Sraffian general equilibrium

Rajas Parchure

Metroeconomica, 2019, vol. 70, issue 4, 587-615

Abstract: If the Sraffa system of equations is augmented by consumption demand equations of households and investment demand equations of industries the result is a complete system of general equilibrium having a unique positive solution for the relative prices, absolute levels of industrial outputs, the rates of growth and profit, the real wage rate, and the shares of ownership of the capital stock. The model has been generalized to include the government sector and determine the tax rate and public expenditure. Constructive algorithms for the computation of the general equilibrium have been presented. Empirical evidence from cross‐country sources has been gathered in support of a central inference of the model viz. the long‐run convergence of industrial growth rates and rates of profit towards uniformity.

Date: 2019
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