On 2010-12-01 20:10, Paul Zarembka wrote:
> Dave, you are beginning to fall into sarcasm. I'll await Paul C. reply
> who may understand my query better. Paul
Clearly at this level of abstraction the steady-state equation says
nothing about the technical structure of the economy in which labour
interacts with the means of production to produce the net product. You
are right about that. There is nothing in the equation as such that
could prevent the capital stock from approaching zero. It would require
a far more detailed framework using input-output matrices and models of
the vector of capital stocks, etc. Ian Wright has done some very
interesting work along those lines.
But the explanatory power of the equation lies precisely in the fact
that it abstracts from this structure and still produces quite accurate
predictions. And that is why I suggested understanding the derivation
first, before going into the asymptotic extreme points.
//Dave Z
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Received on Wed Dec 1 14:35:43 2010
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