The Market for Savings in the Theory of General Intertemporal Equilibrium

Area 13 – Scienze economiche e statistiche

A recent debate on the theory of general intertemporal equilibrium with production is focused on whether this theory is immune from the criticism to the aggregate version of the neoclassical theory of value and distribution. This article resumes two controversial and related issues of that debate: 1) whether a market of aggregate values (saving) for each period is implicit in that theory and is as much relevant for the determination of an equilibrium as the markets for dated physical commodities which appear in the generally accepted form of the corresponding model; 2) whether the possibility of reverse capital deepening and reswitching of techniques can intrude into the model through that hidden market and become a source of non meaningful equilibria. The arguments presented will lead to an affirmative response to question 1). Furthermore they will provide, also in the light of a recent (2009) contribution by Garegnani to the same question, a revised version of the quasi-equilibrium model which he used to describe the possibility 2).

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