Reflecting on the Capital Debates from Modern Perspectives: Interest Rate, Marginal Product of Capital, Equilibrium of Simultaneous Equations and Capital Intensity/Factor Remuneration

2014 ◽  
Author(s):  
Minseong Kim
Keyword(s):  
Interest Rate ◽  
Intensity Factor ◽  
Capital Intensity ◽  
Simultaneous Equations ◽  
Marginal Product ◽  
Marginal Product Of Capital

Interest and the Marginal Product of Capital: A Critique of Samuelson

2007 ◽  
Vol 29 (4) ◽  
pp. 453-464 ◽  
Author(s):  
Robert P. Murphy
Keyword(s):  
Graduate Students ◽  
Interest Rate ◽  
Real Wage ◽  
Inverse Relationship ◽  
Factor Price ◽  
Marginal Product ◽  
Real Wages ◽  
Real Rate ◽  
The Real ◽  
Marginal Product Of Capital

The association of the equilibrium real rate of interest with the marginal product of capital is a staple of modern mainstream economics. Indeed, when graduate students are asked to find a typical model's equilibrium values of the real wage and interest rate, there is apparently nothing more natural than calculating the derivative of the production function with respect to labor and capital, respectively. This seems to make perfect economic sense, because under competitive conditions, the laborer gets paid the marginal product of his labor, while the capitalist gets paid the marginal product of his capital. Students can even derive the “factor-price frontier” (developed in, for example, Samuelson 1953) to show the inverse relationship between real wages and the real rate of interest, where the “factors” are, of course, labor and capital.

scholarly journals INTRA ASEAN-5 CAPITAL FLOWS: DO THEY REPRESENT NEOCLASSICAL BELIEF OR LUCAS PARADOX?

2015 ◽  
Vol 18 (2) ◽  
pp. 157-182
Author(s):  
Nurul Qolbi ◽  
Akhmad Syakir Kurnia
Keyword(s):  
Human Capital ◽  
Capital Flows ◽  
Capital Flow ◽  
Marginal Product ◽  
Host Countries ◽  
Poor Countries ◽  
Quality Of Institutions ◽  
Marginal Product Of Capital ◽  
Asean Countries

In the neoclassical belief, capital flows downhill from rich to poor countries as a consequence of capital endowment variation. In contrast to the neoclassical belief, Lucas found evidence that capital tends to flow uphill. This paper investigates the intra ASEAN-5 capital flows. Using panel estimation, we found that marginal product of capital, human capital, total factor productivity growth, and the quality of institutions appear as determinants for the capital flow from Indonesia, Malaysia, Philippines, and Thailand to Singapore as a host country. On the contrary, the capital flow from Singapore to other ASEAN countries as host countries is encouraged only by the quality of institutions, human capital as well as per capita GDP. The result shows that Lucas variables emerge as determinants for the uphill and downhill capital flow in ASEAN-5. In the meantime, marginal product of capital that represents neoclassical variable appears as the determinant for uphill capital flow from other ASEAN countries to Singapore. This gives significant insight that Lucas variables emerge as companion to the neoclassical variables in explaining intra ASEAN capital flow

The Marginal Product of Capital, Capital Flows, and Convergence

2010 ◽  
Vol 100 (2) ◽  
pp. 73-77 ◽  
Author(s):  
Sirsha Chatterjee ◽  
Kanda Naknoi
Keyword(s):  
Capital Flows ◽  
Marginal Product ◽  
Marginal Product Of Capital

scholarly journals The Marginal Product of Capital

2005 ◽  
Author(s):  
Francesco Caselli ◽  
James Feyrer
Keyword(s):  
Marginal Product ◽  
Marginal Product Of Capital

scholarly journals Fundamentals Or Fancies? The Justification Of Returns To Equity From 1950 To 2007

2014 ◽  
Vol 12 (4) ◽  
pp. 345
Author(s):  
Bruce Howard
Keyword(s):  
Marginal Cost ◽  
Balance Sheet ◽  
Economic Capital ◽  
Financial Capital ◽  
Marginal Product ◽  
Left Hand ◽  
Right Hand ◽  
Marginal Product Of Capital ◽  
The Right

Profit-maximizing firms should continue to invest in economic capital to the point where the marginal product of capital equals the marginal cost of financial capital. As such, the returns to shareholders on the right-hand side of the balance sheet should be justified by the returns generated by assets employed on the left-hand side. The author compares the net real after-tax marginal product of capital with returns on U.S. equities over the period 1950 to 2007. The results show that long-term returns on large cap U.S. equities are justified by the marginal product of capital.

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