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Production Functions, the Kaldor-Verdoorn Law and Methodology

  • Marc Lavoie
Chapter

Abstract

Marc Lavoie in this chapter, titled ‘Production Functions, the Kaldor-Verdoorn Law and Methodology’, focuses on John McCombie contributions, and argues that he has been an unrelenting critic of the neoclassical production function for over 30 years. With his co-author Jesus Felipe, along with Anwar Shaikh, he has provided a number of proofs demonstrating that the apparent empirical successes of neoclassical production functions could be attributed to the fact that these production functions were reproducing the identities of the national accounts. Kaldor’s technical progress function and the Kaldor-Verdoorn equation, however, do share some similarities with these identities, and thus one may wonder if they are subjected to the same critique. It is shown that the Kaldor-Verdoorn equation is impervious to the critique. Some of the methodological considerations advanced by John McCombie, notably those concerning the instrumentalist approach of mainstream economics and its DSGE model, are also considered. The chapter concludes with a pledge in favour of meta-regression analysis, recalling that a recent such analysis has shown that the Kaldor-Verdoorn effect is genuine.

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Marc Lavoie
    • 1
    • 2
  1. 1.University Sorbonne Paris CitéParisFrance
  2. 2.University of Paris 13 (CEPN)ParisFrance

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