Monday, March 17, 2014

Reading Piketty

Reading "Capital" by Piketty without knowing standard economics, I stumbled into the first hurdle in chapters 5 and 6. So far it is very readable like a good novel. In chapter 5 he starts discussing the long run behaviour of 'beta' β, the capital to income ratio. In this some model seems to be needed and hence some assumptions in his Harrod-Domar-Solow formula. Expositions of Solow model and the formula are available on YouTube and the other sources, Piketty's technical appendix is in French. While reading other sources, one has to be careful about the definitions, for example, Piketty also includes depreciation in his definition of income. In any case, Branko Milasovic says that the limiting behaviour only plays a subsidiary role in the book. May be it is better to see a few examples and go ahead. And use Milasovic review as a guide:

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