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Wealth accumulation and economic progress

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We argue that an evolutionary dynamic economic theory must take in account stocks of goods, not just flows of services. We also argue that in such a theory the accumulation of durable goods (i.e. wealth) is actually a key feature. Moreover under straightforward assumptions, notably the "no-loss" rule for transactions wealth is a non-decreasing function of goods and money. Explicit formulae for wealth and several derived variables (marginal values) are derived. We also show how conventional utility functions are related to the wealth function

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/Inseadwp1993/93-32.pdf

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Copyright INSEAD. All rights reserved