Bouniatian, Mentor (1877–1969)

Abstract

Bouniatian argued that productive forces cannot be transferred to the future just through the accumulation of capital goods; the choice of production methods determines an equilibrium relation between aggregate consumption and the capital stock. Economic fluctuations are explained by both the increase of the proportion of income saved when output is growing and the period of time necessary for the production of capital goods. The temporary separation between investment and consumption decisions is reflected in a more than proportional increase of capital goods. Changes in the marginal utility of consumption and capital goods and a generalization of the old King’s law explain changes in the price level.