Missing equation in Piketty’s r-g theory

Authors

  • Yasunori Fujita Keio University

DOI:

https://doi.org/10.17811/ebl.4.2.2015.57-62

Abstract

Although Thomas Piketty has revolutionized our understanding of inequality, logic behind his r-g theory is not developed formally in his researches. The present paper, by finding out the missing part of Piketty’s r-g theory, present a complete version of Piketty’s framework. It is revealed that necessary and sufficient condition for the r-g theory is SY(t)+AY(t)=CF(t). That is, savings in a broad sense (left hand side) is equal to the consumption using financial capital (right hand side). We also reveal that the problem is not in the Second Fundamental Law of Capitalism, but in the formulation of capital accumulation dynamics. Furthermore, it is demonstrated that the two Fundamental Laws of Capitalism are not necessary for deriving the r-g theory.

References

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Published

30-06-2015

How to Cite

Fujita, Y. (2015). Missing equation in Piketty’s r-g theory. Economics and Business Letters, 4(2), 57–62. https://doi.org/10.17811/ebl.4.2.2015.57-62

Issue

Vol. 4 No. 2 (2015): June

Section

Articles

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