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Sraffian Resolution of the Pasinetti Paradox
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This paper investigates the Cambridge equation of growth and distribution from the standpoint of the theory of value. It is shown that the equation continues to hold good in a generalized form and its paradoxical aspect, viz., its invariance to workers’ consumption and saving behaviour stands eliminated. Results of this kind strengthen the possibility that Keynesian theory could provide stronger foundations for the theory of income distribution than marginal productivities of factors.
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