[PEN-L:11048] Re: K/Y ratios

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

I have been away.  I think that I have the answer to the low K/Y ratios.

Production is getting less capital intensive.  In the last century,
capital intensive production [railroads, steel] was important.  Today,
we think of computers.

Computers have a low K/Y ratio, but they depreciate fast.  So in terms
of flows of capital and output, long run averages of computers vs
railroads might not be too different.

So the illusion is from comparing Y [a flow] with K [a stock].
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx