EuroEconomica, Vol 27, No 1 (2011)

Abstract

It  is  found  that  the  hypothesis  of  a  constant  replacement  investment  capital  stock  ratio  has several  fundamental  shortcomings.  It  conflicts  with  most  of  the  available  theoretical  and empirical evidence. It is alien to researchers in other fields of economics and related areas; and, perhaps most importantly, it has restrained progress in economic theory and econometric applications  based  on  more  realistic  conceptualizations  of  the  time  structure  of  capital.  On these grounds it is concluded that its abandonment is long overdue.