1. "You can do a lot with a little bit of capital, so the need for capital is low, hence the demand is low, hence interest rates are low"
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Replying to @AndyHarless
2. This is what I call (following
@binarybits' Vox article) the Pokemon Theory of Secular Stagnation. I associate the idea with@LHSummers.1 reply 0 retweets 1 like -
Replying to @AndyHarless
3. I'm struggling to fit this into the Cambridge, USA-style (as opposed to UK) conception of a production function that I hold dear.
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Replying to @AndyHarless
4. I think what they're saying is that the return to the first few units of K is very high but that the marginal return diminishes quickly.
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Replying to @AndyHarless
5. So the average product of capital is extremely high, but the optimal quantity of capital is quite low.
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Replying to @AndyHarless
6. If I'm not mistaken, this means there are huge quasi-rents associated with capital & more incentive than usual to acquire monopoly power
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Replying to @AndyHarless
is it related to this? http://www.wsj.com/articles/the-hottest-metric-in-finance-roic-1462267809 …
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Replying to @binarybits
@DaveCBenoit This framework suggests ROIC is an attempt to put a positive spin on lack of profitable reinvestment opportunities2 replies 0 retweets 0 likes -
Replying to @AndyHarless @DaveCBenoit
Yeah. What I wonder is if there's a collective action problem involved here.
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