6

I think it has to do with declining interest in Marxian economics. In the past the Marxian economics, especially the one in Sraffian tradition had much wider appeal. The rate of profit was an important metric in Marxian economics, since Marxian economics makes several important predictions about the rate of profit in 'capitalist' economies (e.g. the ...


6

It may be interesting to exploit the homothetic separability of the CES utility function in $x$. It implies that $$\frac{x_i}{x_j} = \left( \frac{\alpha_i}{\alpha_j}\frac{p_j}{p_i} \right)^\sigma $$ and after $log$-transformation: $$\ln(x_i) - \ln(x_j) = \beta_{ij} + \sigma (\ln(p_j) - \ln(p_i)). $$ After adding a random term, this specification could be ...


5

This answer closely follows the logic of estimation of translog cost function presented in Section 4.7 of Fumio Hayashi's "Econometrics". Define for convenience the CES aggregate price index $P:=(\sum_i \alpha_i^\sigma p_i^{1-\sigma})^\frac{1}{1-\sigma}$. Then the Marshallian demand system in log form can be written as a system of linear equations $...


4

In this comment I simply show that Under certain assumptions the problem is not an estimation problem, there is an exact solution for $\sigma$ and a solution for the structural errors $\alpha_i$ up to a normalisation. The demand system considered is described by the Marshall demand function $$x_k^\star(p,M) = \left(\frac{\alpha_j}{p_j}\right)^{\sigma}\frac{...


3

For most part different 'schools of thought' do not have different definitions of terms. New Keynesian definition of GDP is the same as Keynesian definition of GDP or Neoclassical definition of GDP or any other 'school of thought' that you can think of. Marginal utility also has the same definition across economics. This is because terminology is not about ...


3

These other answers seem to be citing some methods I haven't quite heard about yet however they all touch upon the idea developed by Czech economist named Jan Kmenta which has come to be known as the Kmenta approximation (an in depth explanation as well as detailed derivation can be found in the documentation of the R package,MicEconCES. A general form of a ...


2

I recently found the answer to this question in an old book called Lectures on Microeconomic Theory (Revised Edition) by Edmond Malinvaud. It turns out that the rate of profit is synonymous with the rate of return on capital/ interest rate. The derivation is quite remarkable. There are two main points where it is mentioned in the text, namely on page 274 ...


1

One of my favorites in this dimension is "This Time Is Different" by Reinhart and Rogoff. Both are respected scholars. The title already suggests what they aim at. Covering sixty-six countries across five continents, This Time Is Different presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing ...


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