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The 40% neoclassical aggregate theory of production

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  • Stefano Zambelli

Abstract

The assumption that production in an economic system may be described by an aggregate neoclassical production function is at the heart of most modern equilibrium neoclassical business cycles and growth models. Its validity requires stringent assumptions on individual production functions and market structure. In this paper, the likelihood that an aggregate neoclassical production function could emerge from a simple heterogeneous production system is assessed by the use of computer simulations. The conclusion is that there exists a world of significant size for which the aggregate neoclassical theory of production does not hold. Copyright 2004, Oxford University Press.

Suggested Citation

  • Stefano Zambelli, 2004. "The 40% neoclassical aggregate theory of production," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(1), pages 99-120, January.
    • Handle: RePEc:oup:cambje:v:28:y:2004:i:1:p:99-120
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    Cited by:

    1. Stefano Zambelli, 2014. "Aggregate Production Functions and Neoclassical Properties: An Empirical Verification," ASSRU Discussion Papers 1405, ASSRU - Algorithmic Social Science Research Unit.
    2. Matteo G. Richiardi & Luis Valenzuela, 2024. "Firm heterogeneity and the aggregate labour share," LABOUR, CEIS, vol. 38(1), pages 66-101, March.
    3. Matteo Degasperi & Thomas Fredholm, 2010. "Productivity Accounting Based On Production Prices," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 267-281, May.
    4. Marc Lavoie, 2022. "Post-Keynesian Economics," Books, Edward Elgar Publishing, number 19900.
    5. Zacharias Bragoudakis & Evangelia Kasimati & Christos Pierros & Nikolaos Rodousakis & George Soklis, 2022. "Measuring Productivities for the 38 OECD Member Countries: An Input-Output Modelling Approach," Mathematics, MDPI, vol. 10(13), pages 1-21, July.
    6. Zambelli, Stefano & Fredholm, Thomas & Venkatachalam, Ragupathy, 2017. "Robust measurement of national technological progress," Structural Change and Economic Dynamics, Elsevier, vol. 42(C), pages 38-55.
    7. Schefold, Bertram, 2016. "Marx, the Production Function and the Old Neoclassical Equilibrium: Workable under the Same Assumptions? With an Appendix on the Likelihood of Reswitching and of Wicksell Effects," Centro Sraffa Working Papers CSWP19, Centro di Ricerche e Documentazione "Piero Sraffa".
    8. Thomas Fredholm & Stefano Zambelli, 2013. "Production Functions Behaving Badly - Reconsidering Fisher and Shaikh," ASSRU Discussion Papers 1305, ASSRU - Algorithmic Social Science Research Unit.
    9. Mario Holzner, 2006. "Real Exchange Rate Distortion in Southeast Europe," wiiw Balkan Observatory Working Papers 68, The Vienna Institute for International Economic Studies, wiiw.
    10. Ariel Dvoskin & Saverio M. Fratini, 2016. "On the Samuelson–Etula Master Function and the capital controversy," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 23(6), pages 1032-1058, November.
    11. Miguel A. León-Ledesma & Peter McAdam & Alpo Willman, 2010. "Identifying the Elasticity of Substitution with Biased Technical Change," American Economic Review, American Economic Association, vol. 100(4), pages 1330-1357, September.
    12. Jesus Felipe & John S.L. McCombie, 2013. "The Aggregate Production Function and the Measurement of Technical Change," Books, Edward Elgar Publishing, number 1975.
    13. Guglielmo Chiodi, 2018. "Sraffa’s Silenced Revival of the Classical Economists and of Marx," Working Papers 4/18, Sapienza University of Rome, DISS.

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