In realistic economic models with n different types of capital goods, the value of the capital stock iswhere Pi is the price of the ith capital good in terms of some numéraire. The value of capital, however, is not an appropriate measure of the ‘aggregate capital stock’ as a factor of production except under extremely restrictive conditions. Wicksell (1893, 1934) originally recognized this fact, which subsequently was emphasized by Robinson (1956).
KeywordsCapital deepening Capital goods Capital theory Capital theory paradoxes Numeraire Production possibility frontier Wicksell effects Wicksell, J. G. K.
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