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- Title
NEOCLASSICAL AND NEWTONIAN THEORY OF PRODUCTION: AN EMPIRICAL TEST.
- Authors
ESTOLA, Matti
- Abstract
We search for regularities observed in the production of goods. Our first observation is that unit root is found in annual productions in all manufacturing industries in Finland and in Sweden. Thus industrial flows of production are observed to follow a first order difference equation. However, the industrial flowsof production have also exogenous time dependencies, and we explainthese by changes in the corresponding product prices due to the profit-seeking behavior of firms in the industries. We test the Newtonian theory of productionagainst the neo-classical onein explaining these price effects on the flows of production, and our observation is that the former works better in every manufacturing industry in both countries.
- Publication
Hyperion International Journal of Econophysics & New Economy, 2015, Vol 8, Issue 1, p7
- ISSN
2069-3508
- Publication type
Academic Journal