The rarity of reswitching explained

Bertram Schefold

Structural Change and Economic Dynamics, 2023, vol. 67, issue C, 128-150

Abstract: Most studies of the frequency of reswitching and reverse capital deepening were based on two or three sector models and came to the conclusion that these phenomena are rare. Here it is shown that the probability of isolated reswitching tends to zero in large economic systems. The assumptions of the new mathematical theorems proposed are supported by an empirical enquiry. The randomness of input–output systems can help to explain the result, but is not essential. If the number of switch-points tends to infinity in large systems, it is not certain that even one represents a case of reverse capital deepening. The focus of the critique of capital will have to change.

Keywords: Capital theory; Reswitching; Reverse capital deepening; Sraffian economics; Input–output analysis (search for similar items in EconPapers)
JEL-codes: B24 C62 C67 D57 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:67:y:2023:i:c:p:128-150

DOI: 10.1016/j.strueco.2023.07.004

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