Capital Values, Wealth, and Related Topics

  • Lester D. Taylor

Abstract

In this chapter, I want to discuss implications of the conservation laws associated with the pool of fluid capital as they relate to asset values in an economy. Specific topics to be discussed include aggregate wealth, real-balance (or wealth) effects, the burden of government debt, taxation of capital gains, gold standards, monetization and demonetization of economies, and economic growth and deflation.

Keywords

Capital Gain Domestic Currency Upward Pressure Real Stock Gold Price 
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.

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References

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    This will be recognized as the Hicksian definition of income [Hicks (1946, p.173)]. It also represents one of the conventional definitions of permanent income [See Friedman ( 1957, Chapter 3)]. Even with the Permanent Income Hypothesis, one nevertheless has to be wary of a fallacy of composition. For an individual, permanent income is defined by Friedman as rW, where r is an interest rate and W represents the individual’s stock of capital, including human capital. Clearly, one cannot define aggregate permanent income as rW“, where W’ = EW, because of the fallacy of composition mentioned in the text. To describe permanent income in the aggregate as rW’ entails nothing other than defining aggregate wealth as the capitalized value of permanent income, where permanent income is defined to begin with as the capacity to consume today without impairing the capacity to consume tomorrow. To treat aggregate wealth as something apart from aggregate income is simply to play a word game with no substance.Google Scholar
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Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • Lester D. Taylor
    • 1
  1. 1.University of ArizonaWilsonUSA

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