Questions tagged [capital]

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14 views

Why does the bond market induce efficient allocation of capital?

Going from this quote by Bryan Collins of Fidelity on China's economy: One of the nice things we see from the development of a domestic bond market is that it starts the process of pricing ...
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20 views

What is “industrial capitalism”?

What's the difference between "industrial capitalism" and "agrarian capitalism" and "mercantilism" and the "industrial revolution" and the 20th century ideas of "Keynesianism"? Is agrarian capitalism-...
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How do Pension Fund capital flows operate?

I'm trying to figure out a method for calculating the impact to markets of outflows from pension plans. More specifically, if we imagine a theoretical huge and underfunded pension plan that is ...
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2answers
52 views

The TYPICAL law of motion of capital

Consider a typical macro firm set-up where the capital can be produced from output goods using a linear technology. It costs some X units of output good to make a unit of the capital, and the capital ...
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1answer
35 views

Looking for help with Solow Model Question [closed]

The question is this: Suppose there is a production function of $Q=F(K, L)=\sqrt{K}\sqrt{L}$. Suppose that MPC=0.8 and the labor force is growing at a rate of 0.05 per year. Also labor force ...
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1answer
72 views

In the context of banking, how (if at all) do the terms 'capital', 'net worth', and 'equity' differ?

In banking, are the three terms capital, net worth, and equity simply identical and exact synonyms? If not, how do they differ? (Aside: And what about in other contexts? For example, does the same ...
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3answers
285 views

Cobb-Douglas production function, given $w$ get $r$ regardless of input levels. Why?

There is a market economy with technology given by: $$Y = K^\alpha L^{1-\alpha} \tag{1}$$ Firms behave competitively and input prices are: $$r = \alpha K^{\alpha-1}L^{1-\alpha} = \alpha(\frac{L}{K})...
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1answer
25 views

Macroeconomic models with labor-replacing capital?

I am reading article http://public.gettysburg.edu/~tlin/research/robots-main.pdf "A New Keynesian Model with Robots: Implications for Business Cycles and Monetary Policy" and I wonder how actual this ...
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1answer
54 views

Market Theory: Upper limit of capital/weatlth accumulation?

Politicians often bicker about how big the government should be when it comes to redistributing wealth. Question: My question is simple; would a laissez-faire approach to the market always result in ...
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0answers
11 views

Return on Capital Invested - what to include in 'capital employed'

The formula for ROCE is: ROCE = net profit before tax / capital employed Where capital employed is long-term liabilities + share capital + retained profit. However, I've only used this in very ...
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2answers
727 views

How can energy consumption be an indicator of per capita availability of capital?

"An important indicator of low capital per head available in developing countries is the consumption of energy". I could not decipher the concept.
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2answers
70 views

What are exactly considered resources in modern economics?

I'm taking a basic course in economics and I'm trying to understand what the term "resources" really mean in this context. Reading this article, I found out that in classical economics, resources are ...
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1answer
48 views

In Mankiw's Macreoconomics, how come capital is assumed to be fixed while investment is assumed to be variable?

I'm looking at Greg Mankiw's Macroeconomics (7th edition), at the model presented in chapter 3: $Y = C + I + G,$ where $Y$ is total output, $C = C(Y-T)$ is consumption, $T$ are net taxes (fixed by ...
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1answer
283 views

What does it mean when capital is immobile as opposed to having full mobility?

The economist Rudolf Hilferding refers to the immobility of capital to be able to respond to market signals. What does he mean by this and why is capital immobile?
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38 views

Which way is the pendulum swinging with regards to “Access to Capital”

The premise is said best by the economist George Magnus in 2015: "Advances in technological productivity gains are benefiting a limited number of people. The principal rewards of modern technology ...
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1answer
329 views

Difference between Outflow of capital and Flight of capital

I may sound stupid to ask this question but pardon me for that. What's the different between Outflow of capital and Flight of capital? I googled about both terms but couldn't find how they differ from ...
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48 views

Welfare function in General Capital model (Search and Matching)?

i'm working on a model from the Mortensen textbook: "Wage dispersion why are similar workers paid differently?". To be precise, i'm working on the model about general capital. In this case, capital is ...
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1answer
2k views

Is the capital-output ratio in developing countries low or high?

For a developing economy, I've seen sources claiming that the capital-output ratio (more commonly known as ICOR) is high (e.g. here and here), while other sources claiming that it's low, like below (...
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4answers
607 views

In GDP growth studies, are factors of production measured as stock or flows?

Consider the following cases: One machine (capital) is used by multiple producers within one year. For instance, farmers renting tractors from the same company. In this case, in terms of GDP, there ...
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2answers
289 views

Is Artificial Intelligence a completely new (and underestimated) production factor?

Accenture research defines Artificial Intelligence as completely new production factor along labour and capital. Is such notion acceptable by economists? As far as I understand then every asset of AI ...
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5answers
735 views

Where does capital come from?

Sorry if this is a birds and the bees type question. Where does capital come from? And I am not talking human capital (which to my mind is skills basically). I suppose I'm taking about financial ...
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2answers
348 views

Solow model, time and steady state

Suppose we have a Solow model: $$ Y(t)=C(t)+I(t) $$ $$ I(t)=sY(t) $$ $$ \dot K=I(t)-δK(t) $$ With a given Cobb-Douglas: $$ Y(t)=Z(t)K^aL^{1-a} $$ $$ y(t)=Y(t)/L(t) $$ $$ k(t)=K(t)/L(t) $$ $$ y=...
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27 views

Corporate use of offshore cash

Recently Microsoft floated a \$17 billion bond to finance the purchase of LinkedIn (remind me to delete my account). Some might wonder why a company with nearly \$100 billion in cash would need to ...