Topic
Capital deepening
About: Capital deepening is a research topic. Over the lifetime, 5203 publications have been published within this topic receiving 230297 citations.
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TL;DR: The authors provides an overview of both theoretical and empirical literature on the link between public investment (capital) and economic growth and concludes that although not all studies find a growthenhancing effect of public capital, there is now more consensus than in the past that public capital furthers economic growth.
Abstract: : This article provides an overview of both theoretical and empirical literature on the link between public investment (capital) and economic growth (national income). We first survey the channels through which public capital can conceivably affect growth. We then turn to reviewing the existing empirical literature, and we conclude that although not all studies find a growth-enhancing effect of public capital, there is now more consensus than in the past that public capital furthers economic growth. However, the impact reported by recent studies is not as big as some earlier studies suggested. We conclude with an overview of what is known about the optimality of public capital stocks.
653 citations
30 Apr 1998
TL;DR: The missing link is social capital as discussed by the authors, which is the way in which the economic actors interact and organize themselves to generate growth and development, but no consensus about which aspects of interaction ad organization merit the label of social capital, nor in fact about the validity of the term capital to describe this.
Abstract: Sustainable development has been defined as a process whereby future generations receive as much capital per capita as--or more than--the current generation has available (Serageldin). Traditionally, this has included natural capital, physical or produced capital, and human capital. Together they constitute the wealth of nations and form the basis of economic development and growth. In this process the composition of capital changes. Some natural capital will be depleted and transformed into physical capital. The latter will depreciate, and we expect technology to yield a more efficient replacement. This century has seen a massive accumulation of human capital. It has now become recognized that these three types of capital determine only partially the process of economic growth because they overlook the way in which the economic actors interact and organize themselves to generate growth and development. The missing link is social capital. There is, however, no consensus about which aspects of interaction ad organization merit the label of social capital, nor in fact about the validity of the term capital to describe this. Least progress has been made in measuring social capital and in determining empirically its contribution to economic growth and development. This report addresses each of these issues in turn.
651 citations
TL;DR: In this article, the authors discuss the production function and the theory of capital in the context of the economic system of the neo-classical system, which is based on the postulate that, in the long run, the rate of real wages tends to be such that all available labor is employed.
Abstract: This chapter discusses the production function and the theory of capital. The dominance in neo-classical economic teaching of the concept of a production function has had an enervating effect upon the development of the subject. The neo-classical system is based on the postulate that, in the long run, the rate of real wages tends to be such that all available labor is employed. In spite of the atrocities that have been committed in its name, there is a solid core of sense in this proposition. The condition that the given amount of capital employs the given amount of labor entails a particular rate of profit. But the value of the stock of concrete capital goods is affected by this rate of profit and the amount of capital that was started with cannot be defined independently of it.
650 citations
TL;DR: In this paper, the authors argue that the efficient-market paradigm is fundamentally misleading when applied to capital flows and that limits on capital movements are a distortion, and that removing one distortion need not be welfare enhancing when other distortions are present.
Abstract: Capital account liberalization, it is fair to say, remains one of the most controversial and least understood policies of our day. One reason is that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows. Another is that empirical analysis has failed to yield conclusive results. The answer, another influential strand of thought contends, is that this efficient-markets paradigm is fundamentally misleading when applied to capital flows. Limits on capital movements are a distortion. It is an implication of the theory of the second best that removing one distortion need not be welfare enhancing when other distortions are present.
635 citations
Posted Content•
TL;DR: The authors describes the role that informational imperfections in capital markets are likely to play in business cycles and develops a simple illustrative model of the impact of adverse selection in the equity market and the way in which this may lead to large fluctuations in the effective cost of capital.
Abstract: This paper describes the role that informational imperfections in capital markets are likely to play in business cycles. It then developes a simple illustrative model of the impact of adverse selection in the equity market and the way in which this may lead to large fluctuations in the effective cost of capital in response to relatively small demand shocks.The model also derives an expression for the cost of equity capital in the presence of adverse selection and provides informational explanations for several widely observed macro-economic phenomena.
623 citations