The gravitation process of market prices towards production prices is here presented by means of an analytical framework where the classical capital mobility principle is coupled with a determination of the deviation of market from normal (natural) prices which closely follows the description provided by Adam Smith: each period the level of the market price of a commodity will be higher (lower) than its production price if the quantity brought to the market falls short (exceeds) the level of effectual demand. This approach also simplifies the results with respect to those obtained in cross-dual literature. At the same time, anchoring market prices to effectual demands and quantities brought to the markets requires a careful study of the dynamics of the 'dimensions' along with that of the 'proportions' of the system. Three different versions of the model are thus proposed, to study the gravitation process: i) assuming a given level of aggregate employment; ii) assuming a sort of Say's law; iii) and on the basis of an explicit adjustment of actual outputs to effectual demands. All these cases describe dynamics in which market prices can converge asymptotically towards production prices.
In this paper we will focus upon the role of absolute advantages in international specialization in connection with the phenomenon of capital mobility. We will provide a historical and analytical reconstruction of the main contributions, starting from the contrast between Smith's and Ricardo's standpoint on the issue. Two deep-rooted conclusions will be questioned by the analysis of this literature: (a) the unequivocal mutual benefits of opening up to international trade; and (b) the specialization of each country in the production of at least one good. With regard to this point, we will also provide a generalization of a result obtained by Parrinello (2010).
Abstract. The formal representation of economic theories normally takes the form of a model, that is, a system of equations which connect the endogenous variables with the values of the parameters which are taken as given. Sometimes, it is possible to identify one or more equations which are able to determine a subset of endogenous variables priorly and independently of the other equations and of the value taken by the remaining variables of the system. The first group of equations and variables are thus said to determine causally the remaining variables. In Pasinetti's works this notion of causality has often been emphasized as a formal property having the burden to convey some deep economic meaning. In this work, we will go through those Pasinetti's works where this notion of causality plays a central role, with the purpose to contextualize it within the econometric debate of the Sixties, to enucleate its economic meaning and to show its connections with other fields of the modern classical approach.
Preliminary version; English to be revisedPlease, do not quote without permission (12/12/2013) J.E.L. classification: B00, B24, B51, C50, E12.
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