Creating Two-Good Reswitching Examples

Abstract:     
The Cambridge Capital Controversy is a long-lasting dispute over the validity and internal coherence of neoclassical theory. A number of textbooks are available to help teach the controversy. Some of these textbooks contain exercises and numeric examples. An important part of the controversy centered on the phenomena of reswitching and capital-reversing, and some of these textbook exercises illustrate these phenomena. This paper is directed towards those who want to create their own simple examples of reswitching in two-commodity models. It shows how to construct such numeric examples, given the maximum wage and switch points for two wage-profits curves that reswitch.

Keywords: Undergraduate Economics Education, Sraffian Economics, Input-Output Models, Input-Output Tables and Analysis, Capital Theory, Production Theory

JEL Classifications: A22, B51, C67, D57, E22, E23

Working Paper Series