Reverse Capital Deepening and the Numeraire: a note

Heinz Kurz and Neri Salvadori

Review of Political Economy, 1998, vol. 10, issue 4, 415-426

Abstract: This note discusses the implication of reverse capital deepening for neoclassical theory, placing special emphasis on the role of the numeraire. It is shown that under certain assumptions, specified in the note, a supply function of capital can be built up that is independent of the demand function. The supply of capital is given in terms of the consumption unit. Reverse capital deepening is reflected in upward sloping segments of the corresponding demand function. A change in numeraire, while generally affecting the shape of the demand function, does not affect the stability property of equilibrium, because it will also affect the shape of the supply function. Hence, what matters is not whether the demand function is upward sloping or not, but whether it cuts the supply function from above or from below. This property, however, is preserved with a change in the numeraire.

Date: 1998
References: View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09538259800000061 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:10:y:1998:i:4:p:415-426

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CRPE20

DOI: 10.1080/09538259800000061

Access Statistics for this article

Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon

More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().