Abstract
Closed-system circular flow models have been ubiquitous in economics for at least half a century. Because these models account for neither new-product R&D, nor the attendant leakages and injections, they obscure understanding of (a) the distinction between new-product and process R&D, (b) the circular flow leakages and injections attending new-product R&D, and (c) Schumpeterian “creative destruction” and “swarming.” To shed light upon these matters, we present an open-system circular flow model and a price theoretic explanation of the swarming overinvestment that characterizes business cycle downturns. JEL Classifications: B20, O31, E30
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
