Named after Swedish economist Knut Wicksell (1851-1926), Wicksell's theory of capital examines factor prices as derived from the value of the marginal product.
Wicksell pointed out that in an equilibrium situation, the interest rate would exceed the value of the marginal product of capital because the aggregate stock of capital would be revalued due to changes in the interest rate.
Famous quotes containing the words theory and/or capital:
“Every theory is a self-fulfilling prophecy that orders experience into the framework it provides.”
—Ruth Hubbard (b. 1924)
“Woman—with a capital letter—should by now have ceased to be a specialty. There should be no more need of “movements” on her behalf, and agitations for her advancement and development ... than for the abolition of negro slavery in the United States.”
—Marion Harland (1830–1922)