Abstract
Abstract The purpose of this paper is to uncover ‘hidden’ conservation laws in the models with heterogeneous capital goods. The first conservation law uncovered is a pseudo-net-productivity relation which implies that the rate of change in national income is equal to the discount rate multiplied by the utility-value-of-investment. Secondly, the ‘modified income’ conservation law is confirmed when the economy possesses taste change and ⧸ or technical change. From an empirical perspective, knowledge of conservation laws can assist in the econometric testing of optimal growth models. In addition to the capital-labor ratio and saving ratio the empirical validity of the models can be tested by the appropriate income-wealth ratios.
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