KALDORIAN DEMAND FUNCTIONS AND THE RETURN TO CAPITAL: AN ANALYSIS IN A TRADE THEORETIC FRAMEWORK

Manmohan Agarwal and Bharat Hazari

Pacific Economic Review, 2009, vol. 14, issue 1, 113-118

Abstract: Abstract. This paper shows that under certain plausible conditions capital accumulation raises the return to capital. A three good trade theoretic model with Kaldorian demand functions is used to establish this result. This proposition is also independent of the assumption of diminishing return to capital a key feature of endogenous growth theory. Our result sheds light on the high rates of investment and growth that many East Asian economies have achieved.

Date: 2009
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https://doi.org/10.1111/j.1468-0106.2009.00438.x

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