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The Optimal Lifetime of Capital Goods: a Restatement of Sraffa's Analysis of Fixed Capital

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  • Giuseppe Vitaletti

Abstract

Determining the optimal life of capital constitutes an important problem in economic analysis, one that has been extensively addressed in the Sraffian literature. In Sraffa's system the lifetime of fixed capital is posited as a given parameter. In the most recent literature on the topic, the lifetime of capital goods becomes endogenous, the outcome of entrepreneurial decisions concerning alternative techniques. This paper concentrates on the problem as an issue separate from, but not antithetical to, the choice of techniques. By changing some fundamental aspects of Sraffa's framework, which is adopted as a point of departure, a solution displaying interesting properties is worked out. In particular, for the determination of commodity prices, the importance of an equation emerges, in which only intermediate input and labour costs appear.

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  • Giuseppe Vitaletti, 2008. "The Optimal Lifetime of Capital Goods: a Restatement of Sraffa's Analysis of Fixed Capital," Review of Political Economy, Taylor & Francis Journals, vol. 20(1), pages 127-145.
    • Handle: RePEc:taf:revpoe:v:20:y:2008:i:1:p:127-145
    DOI: 10.1080/09538250701622436
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    1. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, September.
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    Cited by:

    1. Giuseppe Vitaletti, 2020. "Rate of Interest and Public Debt in a Sraffian-Keynesian Model," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(2), pages 219-231, December.
    2. Giuseppe Vitaletti, 2015. "A new political economy approach for the economic crisis," Working papers 18, Società Italiana di Economia Pubblica.
    3. Giuseppe Vitaletti, 2019. "Sraffa, saggio di interesse, sistema fiscale," Working papers 80, Società Italiana di Economia Pubblica.

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