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An unpleasant dilemma for contemporary general equilibrium theory

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  • Ariel Dvoskin

Abstract

By examining the contributions of two prominent contemporary neoclassical economists, i.e. Lucas and Hahn, the article attempts to shed light on the problematic relationship between neoclassical theory and observation. It is argued that this approach must face the unpleasant dilemma of having to choose between endowing general equilibrium theory with an explanatory role that is marred by its illegitimate notion of capital as a single factor of variable form (Lucas); or alternatively, to consistently treat each capital good as a distinct factor of production, with the bitter implication that the theory must simply renounce to have a correspondence with observation (Hahn).

Suggested Citation

  • Ariel Dvoskin, 2016. "An unpleasant dilemma for contemporary general equilibrium theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 23(2), pages 198-225, April.
    • Handle: RePEc:taf:eujhet:v:23:y:2016:i:2:p:198-225
    DOI: 10.1080/09672567.2014.881898
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    References listed on IDEAS

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    1. Burmeister,Edwin, 1980. "Capital Theory and Dynamics," Cambridge Books, Cambridge University Press, number 9780521297035.
    2. Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-472, June.
    3. Fabio Petri, 2004. "General Equilibrium, Capital and Macroeconomics," Books, Edward Elgar Publishing, number 3438.
    4. Fabio Petri, 2009. "On the Recent Debate on Capital Theory and General Equilibrium," Department of Economics University of Siena 568, Department of Economics, University of Siena.
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    Cited by:

    1. Fabio Petri, 2022. "General equilibrium and the neo‐Ricardian critique: On Bloise and Reichlin," Metroeconomica, Wiley Blackwell, vol. 73(4), pages 1021-1047, November.
    2. Sergio Cesaratto, 2022. "Le frontiere della politica monetaria: aspetti didattici, teorici, di politica economica. Un review article (The frontiers of monetary policy: didactic, theoretical, economic policy aspects. A review ," Moneta e Credito, Economia civile, vol. 75(299), pages 353-373.
    3. Zhao, Zhe & Wang, Pei & Chen, Jiancheng & Zhang, Fan, 2021. "Economic spillover effect of grass-based livestock husbandry on agricultural production—A case study in Hulun Buir, China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    4. Fabio Petri, 2017. "The Passage of Time, Capital, and Investment in Traditional and in Recent Neoclassical Value Theory," Department of Economics University of Siena 750, Department of Economics, University of Siena.
    5. Ariel Dvoskin & Fabio Petri, 2017. "Again on the Relevance of Reverse Capital Deepening and Reswitching," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 625-659, November.
    6. Sergio Cesaratto, 2017. "Bofinger and Ries versus Borio and Disyatat: macroeconomics after endogenous money. A brief note," Department of Economics University of Siena 763, Department of Economics, University of Siena.

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