Abstract for: Supposing a Control Law of Capital Accumulation for the Modern Italian Economy
This paper formulates a hypothetic law of capital accumulation (HL) for modern Italian economy mainly owing to three analytical devices. The first handles the so-called Verdoorn law. HL reconciles a direct relation between growth rates of net output and labour productivity with an inverse relation between growth rates of employment ratio and labour productivity. The second advances a ‘Ricardian’ view of an inverse relationship between growth of employment and returns. The third transforms constant profit investment share into a secularly declining endogenous variable. This paper explores analytically and numerically inertia Scenario I and two stabilising Scenarios II and III of the Italian economic development in XXI century and beyond. In inertia Scenario I, capital accumulation is marked by long swings with a period of about 20 years. Decelerating adjustment of profit investment share to its stationary magnitude depending on profitability would be stabilising for long swings without altering a non-trivial stationary state. Establishing an inverse relation between profit investment share and capital-output ratio in a control law (CL) not only smoothes long swings but slightly raises stationary profitability in stabilization Scenario II above stationary profitability in Scenario I. Stabilization Scenario III exposes fallacy of the neoclassical golden rule of accumulation.