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Capital Theory

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Abstract

Capital theory examines the special role played by time in resource allocation studies. The determination of the interest rate and functional distribution of income as well as how rational agents invest are analysed within single- and multi-sector general equilibrium frameworks. Here, agents exercise perfect foresight over alternative consumption and capital accumulation programs. Efficient programs are characterized. Representative and multi-agent infinitely lived households are studied. Equivalence principles link the equilibrium programs and optimal paths. Heterogeneous agent models with borrowing constraints are reviewed. A behavioural model of intertemporal choice is also compared to its constant discounting counterpart.

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Robert A. Becker

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  1. Robert A. Becker
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Becker, R.A. (2018). Capital Theory. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2448

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