The European Journal of the History of Economic Thought
Volume 22, Issue 2, Mar 2015
Pages 300-321
- DOI: 10.1080/09672567.2013.792372
- Print ISSN: 0967-2567
- Online ISSN: 1469-5936
A comprehensive graphical exposition of the macroeconomic theory of Böhm-Bawerk
Abstract
This paper offers a comprehensive graphical exposition of Böhm-Bawerk's formalised macroeconomic theory. This graphical model is used here for the first time to study the effects of the changes in the explanatory variables (quantity of capital, number of workers and level of technical knowledge) on the dependent variables (interest rate, wage and period of production). This systematic application of the model shows that some of the conclusions drawn by Böhm-Bawerk are incorrect and need to be amended. A comparison with Solow's model also shows that Böhm-Bawerk can legitimately be considered as one of the main originators of the standard contemporary approach in macroeconomics of equilibrium and growth.
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Keywords
- Distribution
- Macroeconomics
- Austrian Economists
- Interest Rates
- Production
- Equilibrium
- Wages
- Neoclassical