ABSTRACT OF PAPER
Title: Approximate Surrogate Production Functions: Do they exist, for large systems?
Author: SCHEFOLD Bertram
The Cambridge debate of the 60's showed conclusively that a meaningful aggregation of capital, so as to obtain a surrogate production function à la Samuelson, is not pos-sible in general, with critical implications also for other variants of neoclassical theory. The framework for the demonstration is that of linear activity analysis. There is an individual wage curve in function of the rate of profit for each technique. If these individual wage curves were straight lines, their envelope would define a wage curve resulting from all techniques, from which a surrogate production function could be derived, but all wage curves are straight only, if there is only one industry. And if wage curves are not straight, phenomena such as reswitching show that essential neoclassical hypotheses need not hold. A recent empirical investigation by Han and Schefold [Cambridge Journal of Economics 30.5, 2006, 737-765] has found one em-pirical example for reswitching and several for reverse capital deepening. A rigorous derivation of surrogate production functions thus is ruled out also on em-pirical grounds, but the paradoxes seem not to be as frequent as the critics once thought, so that the question arises whether approximate surrogate production func-tions could be derived, with individual wage curves which would be sufficiently linear to construct approximate surrogate production functions, indicating a relationship be-tween the intensity of capital and output per head which would be sufficiently precise to work with. The presentation is part of a larger work in preparation. I shall speak about new ana-lytical developments at the input-output conference, to be held in Istanbul, while my presentation for ESHET will focus on the history of these ideas. - Bertram Schefold -
Registred web users only can download this paper - Go back
Please note that files available for download have not been checked for viruses. These files have been submitted by authors of the conference to this web site. Conference organisers can't accept any responsibility for damages caused to users by downloading such files.