dynamics of output and employment in the u s economy this paper investigates the changing relationship between employment and real output in the u s economy from 1948 to 2010 both at the aggregate level and at some major industry grouping levels of disaggregation real output is conventionally measured as value added corrected for price ination but there are some industries in which no independent measure of value added is possible and existing statistics depend on imputing value added to equal income indexes of output that exclude these imputations are closely correlated with employment over the whole period and remain more closely correlated during the current business cycle this analysis oers insights into deeper

labour s shares and profitability crisis in the u s recent experience and post war trends extends work on u s rate of profit by t e weisskopf 1979 firstly the author finds by extending weisskopf s data into the early 1980s that continued downward pressure on profitability i s explained by capacity utilization in contrast to weisskopf s explanation of rising labor share secondly it is found that ri sing labor share in the post war period is largely composed of r ising levels of supplemental fringe benefits and is in the earl y part of the period also explained by rising nonproduction lab or costs production worker wage share falls secularly and this may be explained particularly in the 1960s by rising price mar k ups on direct cost copyright 1987 by oxford university press

approximate surrogate production functions the cambridge debate showed that an aggregation of capital is not possible in general a recent investigation has found one example for reswitching and several for reverse capital deepening but the paradoxes appear to be infrequent the paper provides a theoretical justification of this result and shows how wage curves of input output matrices with small non dominant eigenvalues become quasi linear with some numeraires large random systems lead to the genesis of such states approximate surrogate production functions then seem possible a family of economic systems with constant capital composition allows construction of a surrogate production function copyright oxford university press

the 40 neoclassical aggregate theory of production the assumption that production in an economic system may be described by an aggregate neoclassical production function is at the heart of most modern equilibrium neoclassical business cycles and growth models its validity requires stringent assumptions on individual production functions and market structure in this article the likelihood that an aggregate neoclassical production function could emerge from a simple heterogeneous production system is assessed by the use of computer simulations the conclusion is that there exists a world of significant size for which the aggregate neoclassical theory of production does not hold

a sraffian critique of the classical notion of centre of gravitation in this paper we use insights from sraffa s classic production of commodities by means of commodities to argue that the classical notion of centre of gravitation is not a sound concept the market mechanics of labour allocation through price signals and quantity adjustments given effectual demands do not lead to a centre of gravitation we work out all such possible market mechanisms including the specific classical case and show that the centre of gravitation is a non attractive point in all cases copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

a statistical equilibrium model of competitive firms abstract we find that the empirical density of firm profit rates measured as returns on assets is markedly non gaussian and reasonably well described by an exponential power or subbotin distribution we start from a statistical equilibrium model that leads to a stationary subbotin density in the presence of complex interactions among competitive heterogeneous firms to investigate the dynamics of firm profitability we construct a diffusion process that has the subbotin distribution as its stationary probability density this leads to a phenomenologically inspired interpretation of variations in the shape parameter of the subbotin distribution which essentially measures the competitive pressure in and across industries our findings have profound implications both for the previous literature on the persistence of profits as well as for understanding competition as a dynamic process our main formal finding is that firms idiosyncratic efforts and the tendency for competition to equalize profit rates are two sides of the same coin and that a ratio of these two effects ultimately determines the dispersion of the equilibrium distribution

an empirical investigation of paradoxes reswitching and reverse capital deepening in capital theory this paper examines the empirical relevance of the capital controversy the price model of sraffa and the dual models of the price and quantity systems of von neumann become the basis of the investigation in the course of the controversy it proved easy to construct theoretical examples which contradicted the fundamental neoclassical hypothesis of an inverse capital demand function this paper presents empirical examples for the first time thiry two input output tables from the oecd database serve as data as a result one envelope is found which involves reswitching reverse substitution of labour or reverse capital deepening are observed in about 3 65 of tested cases they involve at least two switchpoints copyright 2006 oxford university press

differential taxation and the encouragement of risk taking abstract in the framework of expected utility maximization with risk aversion it is shown that the standard result about the tax encouragement of risk taking in a two asset model can be extended to the case of many risky assets there are no tax substitution effects within the set of risky assets in particular there is no substitution from less to more risky assets it is also demonstrated that the qualitative response pattern is independent of the assumed existence of a safe asset the by now common conclusion that capital income taxation encourages risk taking must therefore be interpreted with some care

a microfoundation for production functions assignment of heterogenous workers to heterogenous jobs in very different fields of economics economic inference and policy evaluation require economists to parametrize a production function that links measures of input factors to measures of output while doing so strong assumptions are implicitly made about microeconomic variables governing the shape of the aggregate production function in this paper i develop an assignment model that provides a microeconomic foundation for aggregate production functions the shape of the production function depends crucially on the distribution of workers and jobs and the type of technological changes depends crucially on the evolution of these distributions sufficient and necessary conditions are provided for the production function to be of the constant ratio of elasticities of substitution form a form nesting the broadly used constant elasticity of substitution form this model provides a way to evaluate how stringent assumptions about the type of production function or technological change are by comparing the implied distribution of jobs and its evolution over time to observations of the distribution of jobs and its evolution over time

the contingent nature of the revolution predicted by marx abstract a formalisation of elster s interpretation of marx s theory of revolution is presented in terms of a one sector model with continuous substitution land as a factor of production and a particular population theory a justification for calling such a model marxian is given then it is shown that the revolution may occur only if the drag caused by the fixed supply of land is greater than the force of technical progress

a note on the statistical verification of marx comment on cockshott and cottrell this note questions the statistical validity of the analyses of the relationship between the rate of profit and the organic composition across industries copyright 2005 oxford university press

the aggregate production function is not neoclassical standard postulates concerning the aggregate production function are about marginal productivities and the associated demands for labour and capital these demands are supposed to be negatively related to the factor prices namely the wage rate and the interest rate the theoretical cases in which these neoclassical properties fail to hold are regarded as anomalies we compute the aggregate values for production capital and labour and find that the neoclassical postulates do not hold for the detailed dataset that we consider the obvious implication of this result is that the models and analysis based on the aggregate neoclassical production functions are ill founded as they are based on something that does not exist

technology distribution and the rate of profit in the us economy understanding the current crisis this paper offers a synoptic account of the state of the debate among marxist scholars regarding the current structural crisis of capitalism identifies two broad streams within the literature dealing in turn with aggregate demand and profitability problems and proceeds to concentrate on an analysis of issues surrounding the profitability problem in two steps first evidence on profitability trends for the non farm non financial corporate business the non financial corporate business and the corporate business sectors in post war usa are summarised a broad range of profit rate measures are covered and data from both the us bureau of economic analysis nipa and fixed assets tables and the federal reserve flow of funds account are used second the underlying drivers of profitability in terms of technology and distribution are investigated the profitability analysis is used to offer some hypotheses about the current structural crisis copyright oxford university press

immigration and housing rents in american cities is there a local economic impact of immigration immigration pushes up rents and housing values in us destination cities the positive association of rent growth and immigrant inflows is pervasive in time series for all metropolitan areas i use instrumental variables based on a shift share of national levels of immigration into metropolitan areas an immigration inflow equal to 1 of a city s population is associated with increases in average rents and housing values of about 1 the results suggest an economic impact that is an order of magnitude bigger than that found in labor markets

on constructing numeraire free measures of price value deviation a note on the steedman tomkins distance this paper argues that there exists an infinite number of numeraire free measures a la steedman tomkins of price value deviation on the empirical side it provides an illustration of those measures using input output data from the swedish economy copyright the author 2010 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

the classicals and the neoclassicals a rejoinder to frank hahn refutes the classical and marxist analysis of prices and competition presentation of an intertemporal equilibrium model in a simple formalism possibility of locating prices of production and a distributed profit rate in an intertemporal equilibrium relationship between prices in intertemporal equilibrium and prices of production ebsco

on measuring the wealth of nations the us economy 1964 2001 this paper examines the methodology of shaikh and tonak measuring the wealth of nations 1994 underlying their calculation of estimates of productive labour in the us economy from 1964 to 2001 the focus is not on the results but on the methods that generate them the paper finds that the compromises made by shaikh and tonak because of data unavailability are unreliable and that better approximations are possible on this latter basis the shaikh and tonak methodology can be used to provide the labour and wage estimates needed for empirical investigations in the surplus based tradition copyright 2005 oxford university press

technology and distribution historical trajectories a la marx abstract in capital marx introduces a system of historical tendencies accounting for the trends of the major technological and distributional variables notably the profit rate quite distinct from the usual steady states marx s main insight is that of a difficulty to innovate it is difficult to find new processes allowing for the growth of labor productivity while not considerably reducing the productivity of capital the growth of the wage rate is stimulated by the rise of employment but the stabilization of the share of wages forbids a direct imputation of the decline of the profit rate to the excessive growth of the wage rate

search liquidity and the dynamics of house prices and construction the dynamics of house prices sales construction and population growth in response to city specific income shocks are characterized for 106 us cities a dynamic model of search in the housing market in which construction the entry of buyers house prices and sales are determined in equilibrium is then developed the theory generates dynamics qualitatively consistent with the observations and a version calibrated to match key features of the us housing market offers a substantial quantitative improvement over models without search in particular variation in the time it takes to sell induces transaction prices to exhibit serially correlated growth jel d83 r21 r23 r31 we explore the consequences of time consuming search and matching for the dynamics of house prices sales and construction at the city level first we char acterize the impact of city specific income shocks on the short run dynamics of average house prices home sales construction and population growth for a panel of us cities we then develop a model in which the entry of new buyers and the construction of new houses in response to such shocks are endogenously determined our theory generates serial correlation in the growth rates of house prices and construction even if income is strictly mean reverting following shocks 1 when calibrated to data on us cities our model accounts for over 80 percent of the variance of house price movements driven by city specific income shocks and nearly half of the observed autocorrelation of house price growth in our empirical analysis we estimate a structural panel vector autoregressive var model using city level observations on the variables listed above we focus

capital income taxation and risk taking in a small open economy abstract how do capital income taxes affect household portfolio choice and growth we approach this question within the context of a stochastic model of a small open economy in which taxes on income from domestic capital equity and foreign bonds affect household portfolio choice welfare and the growth rate of the economy the theoretical and numerical analysis demonstrates the important role that risk plays in determining the mean and variability of growth as well as the conditions under which a higher tax rate can be welfare improving to shed more light on the complex theoretical interaction between taxes and risk taking we estimate a reduced form multinomial probit model of household portfolio choice using the method of simulated moments the empirical evidence is in stark contrast to the conventional wisdom we find that higher taxes make it less likely that the household will hold risky assets

investment behavior and the biased perception of limited loss deduction in income taxation abstract we use a laboratory experiment to study the extent to which investors choices are affected by limited loss deduction in income taxation we first compare investment behavior in the no tax baseline to a tax control setting in which the income from investments is taxed we find that investors significantly reduce their risk taking as predicted by theory next we compare the baseline investment choices to choices under three different types of income taxation we observe that risk taking is significantly increased with partial and with capped loss deduction but is unaffected by a tax system that allows no loss deduction since in all these treatments the after tax outcomes of the prospects were identical we conjecture that investors have a positively biased perception of partial and capped loss deduction that promotes their willingness to take risks

a note on the organic composition of capital and profit rates it is widely believed that the rate of profit across industrial sectors while not in fact uniform as stipulated in the theory of prices of production is independent of the sectoral organic composition of capital it follows that the simple labour theory of value must be systematically in error as a predictor of actual sectoral aggregate prices we offer empirical evidence from the us economy 1987 input output table suggesting that this is not soc there is a substantial and statistically significant negative association between organic composition and profit rate across sectors copyright 2003 oxford university press

value price and exploitation the logic of the transformation problem this paper tries to clarify the logical structure of the relationship between labor values and prices from an axiomatic perspective the famous transformation problem is interpreted as an impossibility result for a specific interpretation of value theory based on specific assumptions and definitions a comprehensive review of recent literature is provided which shows that there are various theoretically relevant and logically consistent alternative interpretations based on different assumptions and definitions

taxation risk taking and growth a continuous time stochastic general equilibrium analysis with labor leisure choice abstract this paper investigates the equilibrium relationship between taxation portfolio choice risk taking and capital accumulation specifically it examines how taxes affect risk taking and capital accumulation we extend the existing literature by relaxing two crucial assumptions in modelling risk taking behavior i that the investment opportunity set is fixed and ii that there is no distinction between attitudes towards risk and behavior towards intertemporal substitution we extend the investment opportunity set of individuals through optimally determined human capital and distinguish intertemporal substitution from attitudes towards risk via a recursive utility function in the presence of these extensions the paper successfully derives a closed form solution to the stochastic growth model with stochastic wage income

values prices of production and market prices some more evidence from the greek economy this paper extends the empirical investigation of the relation between labour values and different price forms in the case of the greek economy subjecting the labour theory of value to empirical tests with data from various countries helps in the derivation of general conclusions regarding its empirical validity and practical usefulness our results on the closeness of values and prices as measured by their absolute deviation and correlation the shape of the wage profit curves the predictive power of labour values over market prices compared with other value bases and the comparison of fundamental marxian categories when estimated in value and price terms provide further support for the empirical strength of the labour theory of value

sraffa leontief lange the political economy of input output economics abstract the fields of political economy and input output economics are commonly unrelated due to the discrepancy between the qualitative and quantitative analysis in economic science with the aim to overcome this separation this paper relates the basic model of production of commodities by means of commodities to the paradigm of planning as the substitute for the market by sketching the logical historical development of input output economics the model of sraffa the leontief matrices and the political economy of marxist tradition represented by oskar lange are strongly associated so that the typical qualitative concepts of planning law of value and historical development of the capitalist system can be connected to the quantitative framework of matrix programming and mathematical formalization

values prices and wage profit curves in the us economy this paper presents labor values and prices of production calculated for the postwar u s economy using a seventy one sector input output model with fixed capital as well as actual wage profit curves during the same period it is found that the cross sectional deviations of values and prices of production from market prices are quite small between 12 and 14 percent on average over time approximately 75 percent of the variation of market prices is accounted for by changes by both values and prices of production and 93 percent of the variation of prices of production is accounted for by changes in labor values wage profit curves exhibit near linearity casting some doubt on the significance of reswitching for actual economies copyright 1989 by oxford university press

the cyclical behavior of the beveridge curve in the housing market abstract this paper develops a business cycle model of the housing market with search frictions and entry of both buyers and sellers the housing market exhibits a well established cyclical component which features three stylized facts prices move in the same direction as sales and the number of houses for sale but opposite to the time it takes to sell a house these stylized facts imply that in the data housing vacancies and the number of buyers are positively correlated i e that the beveridge curve is upward sloping a baseline search and matching model of the housing market is unable to match these stylized facts because it inherently generates a downward sloping beveridge curve with free entry of both buyers and sellers our model reproduces the positive correlation between prices sales and vacancies and matches the stylized facts qualitatively and quantitatively

asymptotic properties of a leontief economy abstract in this paper we discuss the asymptotic properties of equilibrium quantities of a leontief economy when agents have additively separable utilities we estimate the rate of growth of equilibrium quantities and prices that either tend to zero or infinity or remain bounded below and above by strictly positive vectors in the case of homogeneous preferences we prove that the quantities of any equilibrium converge to those of an equilibrium that grows at a constant rate

on measuring the deviation of prices from values it has often been found useful to measure in some way the extent to which with profit prices diverge from zero profit values but it is not satisfactory to employ a measure which varies with the choice of numeraire for this element of arbitrariness has nothing to do with the central idea of asking how much the direction of the price vector differs from that of the value vector the authors develop a measure which involves no numeraire and then illustrate its use with data from the united kingdom the irish republic and australia copyright 1998 by oxford university press

the neo ricardians focuses on the neoclassical theory of economics in great britain calculation for the standard commodity assumptions of piedro sraffa on the cycle of production functions of the rate of return ebsco

technological change in canada 1961 80 an application of the surrogate wage function this paper applies c ozol s surrogate wage function to canadian input output data to analyz e the general properties of technological change during the 1961 80 p eriod technological change manifests itself in the shifts of the est imated surrogate wage curves which indicate the changing capital and labor intensities of the production system the empirical results of this study imply that technological progress in canada is generally l abor saving over the entire 1961 80 period and capital saving over th e 1961 66 period the actual tendencies of the technological evolutio n investigated appear to be explained by the continuous mechanization of the production process

labour time versus alternative value bases a research note this paper provides empirical support for the law of value understood as the proposition that embodied labor time is conserved in exchanges of commodities market prices are well correlated with the sum of direct and indirect labor content is it possible to produce equally good correlations by taking the sum of direct and indirect x content where x is some input other than labor time the authors repeat the analysis for electricity iron and steel and oil and show that the answer is no the high correlations in the case of labor time are therefore not a statistical artifact copyright 1997 by oxford university press

search liquidity and the dynamics of house prices and construction corrigendum in the course of our ongoing research we have discovered two substantive errors in this article these mistakes do not affect significantly either the qualitative nature of the results or any of the principal conclusions stated in the paper they do however affect the specific quantitative results one error affects the empirical findings presented primarily in section i and the online appendix the other involves the calculation of sales of existing houses in artificial data generated by the model this affects both the calibration section iv and the equilibrium dynamics in section v principally with regard to the dynamics of sales the article s quantitative results are presented through tables of statistics and figures depicting impulse responses virtually all of the specific numerical values in these tables and figures are affected most only trivially but some significantly in this corrigendum we describe the two errors and present corrected values and new versions for the statistics and figures most affected we number the tables and figures as in the original article and the revised online appendix updated correct programs have replaced those containing the mistakes on the aer s website and the revised online appendix contains a complete set of corrected tables and figures

heterogeneous labour and the fundamental marxian theorem as was pointed out by morishima at the end of his famous book on marx s economics the heterogeneity of labour is a serious dilemma for marx s theory of exploitation especially for the so called fundamental marxian theorem the problem which should be separated from the peculiarities of joint production consists in finding an appropriate reduction of the various types of labour to one common unit recently bowles and gintis have undertaken an interesting reformulation of the marxian theory of value with respect to heterogeneous labour by avoiding any reduction at all bowles and gintis 1977 1978 cf also steedman 1977 holliinder 1978 but for the purpose of the fundamental marxian theorem this only shifts the problem from the heterogeneity of labour to the heterogeneity of the respective rates of exploitation the aim of the present paper is to extend the fundamental marxian theorem without joint production from homogeneous to heterogeneous labour section 3 this extension is based on a new concept called the standard reduction of labour because of its dual relationship to sraffa s standard commodity section 2 for some arguments a certain type of matrices called sraffa matrices is needed which generalize the quasiirreducible matrices as introduced by bowles and gintis appendix standard reduction implies always a uniform rate of exploitation whereas the same is true for the reduction by wage rates only in special cases for example uniform consumption labour inputs only prices proportional to labour values for the first two cases cf morishima 1978 hence in general standard reduction and reduction by wage rates are different

on sraffa s standard commodity the necessity of expressing the relative price of a commodity in terms of another commodity makes it impossible to distinguish that part of any change that can be ascribed to the characteristics of the commodity itself from the part of that change that is to be ascribed to the characteristics of the commodity of reference i e the numeraire ricardo 1817 was the first to point out this problem and the need to find an invariable measure of value but he was not able to solve the problem in 1960 sraffa suggested using a bundle of commodities that he called standard commodity to accomplish this function claiming that it was a standard of value invariant with respect to changes in the distribution of income but in sraffa s book there is no explicit proof of this claim this gave rise to many misunderstandings about the standard commodity and its role as invariable measure of value this paper proposes a proper definition of an invariable measure of value and then proves that the sraffa standard commodity does fulfil the requirements of this definition copyright 2004 oxford university press

the dynamics of competition a restoration of the classical analysis the main purpose of this article is to show that it is possible to construct a model of competition based on the classical perspective smith ricardo and marx an analysis of the work of the classics is presented and their views of the workings of competition is contrasted with neoclassical and keynesian approaches a simple model with two commodities is constructed in which the stability of the classical long term equilibrium is shown under certain conditions this first model is developed to include the treatments of gravitation rationing deficiency in demand choice of the technology and three commodities copyright 1987 by oxford university press

labour values prices of production and the missing equalisation tendency of profit rates evidence from the german economy during recent years several empirical studies have found that deviations from labour values to market prices are quite small however most of these articles do not offer a detailed reason for this result in this paper two theoretical justifications of the labour theory of value are brought together with some data concerning labour values prices of production and market prices on the basis of german input output tables from 2000 and 2004 in addition the statistical characteristics of profit rates are analysed both of the theoretical arguments are much in line with the empirical observations because there is only a slight transformation tendency and at the same time profit rates and capital intensity are negatively correlated moreover during the period under observation the german economy seems to be in a state of statistical equilibrium copyright oxford university press

quantitative empirical research in marxist political economy a selective review this paper surveys quantitative empirical research in some key areas of marxist political economy following an introductory section on the value controversy the paper surveys quantitative empirical research on the following topics a marxist national accounts b classical marxist theory of relative prices c probabilistic political economy d profitability analysis and e classical marxian theories of growth and technical change i end by highlighting two important puzzles in the extant literature

the mirage of exchange rate regimes for emerging market countries this paper argues that much of the debate on choosing an exchange rate regime misses the boat it begins by discussing the standard theory of choice between exchange rate regimes and then explores the weaknesses in this theory especially when it is applied to emerging market economies it then discusses a range of institutional traits that might predispose a country to favor either fixed or floating rates and then turns to the converse question of whether the choice of exchange rate regime may favor the development of certain desirable institutional traits the conclusion from the analysis is that the choice of exchange rate regime is likely to be of second order importance to the development of good fiscal financial and monetary institutions in producing macroeconomic success in emerging market countries this suggests that less attention should be focused on the general question whether a floating or a fixed exchange rate is preferable and more on these deeper institutional arrangements a focus on institutional reforms rather than on the exchange rate regime may encourage emerging market countries to be healthier and less prone to the crises that we have seen in recent years

the deviation of production prices from labour values some methodology and empirical evidence contrary to what is expected from indirect evidence and two commodity hypothetical examples the evdie nce provided in this paper supports david ricardo s empirical proposi tion that relative prices of production are mainly determined by labo r value ratios the results obtained indicate that a 1 percent change in profit rate will cause relative prices to change up to 2 percent and as the profit rate on gross capital is approximately 5 percent o ne ends up with a 90 percent labor theory of value the empirical evidence refers to the yugoslav economy but the factors that determ ine the deviations considered turn out to be of the same order of mag nitude as in other economies copyright 1987 by oxford university press

on the present state of the capital controversy the post war capital controversy seems to have had two distinguishable stages thanks to the unambiguous phenomena of reswitching and reverse capital deepening the first stage was conclusive in discarding from pure theory the traditional versions of neoclassical theory that relied on the notion of capital as a single quantity subsequently however when the implications of those phenomena took centre stage in the controversy together with the reformulations of the theory which intended to do away with the quantity of capital several misunderstandings prevented i shall contend decisive progress in the analysis and we entered an inconclusive phase of the discussion