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A test of “turbulent arbitrage”

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  • Eric Kemp-Benedict

Abstract

Anwar Shaikh's theory of turbulent arbitrage predicts that incremental profit rates will tend to equalize across sectors, albeit in a noisy and turbulent fashion. He supports the claim with plots of time series of average and incremental profit rates for US sectors. This paper applies a Kolmogorov-Smirnov two-sided test to pairs of sectoral profit rate time series, drawing on Shaikh's data. The results support Shaikh's claim.

Suggested Citation

  • Eric Kemp-Benedict, 2023. "A test of “turbulent arbitrage”," Working Papers PKWP2313, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp2313
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    File URL: https://www.postkeynesian.net/downloads/working-papers/PKWP2313.pdf
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    References listed on IDEAS

    as
    1. Lee,Frederic S., 2006. "Post Keynesian Price Theory," Cambridge Books, Cambridge University Press, number 9780521030212, October.
    2. Marc Lavoie, 2014. "Post-Keynesian Economics: New Foundations," Post-Print hal-01343652, HAL.
    3. Shaikh, Anwar, 2016. "Capitalism: Competition, Conflict, Crises," OUP Catalogue, Oxford University Press, number 9780199390632.
    4. John Graham & Campbell Harvey, 2002. "HOW DO CFOs MAKE CAPITAL BUDGETING AND CAPITAL STRUCTURE DECISIONS?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(1), pages 8-23, March.
    5. Eckhard Hein, 2014. "Distribution and Growth after Keynes," Books, Edward Elgar Publishing, number 15903.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    turbulent arbitrage; real competition; profit rates; Kolmogorov-Smirnov test;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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