The Allocation of Investment
نویسنده
چکیده
Because contemporary growth theory has focused upon models with a single capital good,' allocation of investment in the dynamic capitalist economy had been uninvestigated until Professor Hahn's recent contribution.2 Hahn shows that an economy with several capital goods faces two crucial problems: (1) The growth path may be indeterminate. (2) Not all paths will converge to balanced growth. He concludes that the implications of these problems for the capitalist economy are indeed serious. The purpose of this paper is to examine more closely this indeterminacy and instability. In our analysis, we employ a model in which consumption is determined by a simple consumption function and the decisions on the allocation of investment among alternative capital goods are made on the basis of short-run profit maximization with short-run perfect foresight about capital gains. In Sections II and III, we show that given initial endowments there exists one and only one assignment of initial prices that is consistent with long-run balanced growth. Furthermore, in the model we treat, whenever momentary equilibrium is not unique, one and only one allocation of investment is consistent with long-run balanced growth. Paths not tending to balanced growth are shown to be intertemporally inefficient. And on such trajectories, the price of one of the capital goods becomes zero in finite time.
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تاریخ انتشار 2009