Some Problems in Capital Theory

In Chapters 1, 2 and 3 it was taken for granted that capital and what it produces can be measured in the same units. This is implicit in the Cobb-Douglas and CES production functions which suggest that there is a clear relationship between the quantity of capital and the quantity of output . It is implicit in the differentiation of such functions to obtain the marginal products of labour and capital. It is implicit in the type of argument where it is supposed that if a given fraction of the value of output is invested and added to the capital stock, this will increase by precisely the value of output times this fraction, with predictable effects on the following year’s potential output. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.