The Classical Theory of Relative Prices: Evidence from the Spanish Economy
Abstract
This paper examines the development and current standing of the theory of value and distribution dominant in the classical and Marxian traditions of economic thought, while exploring its empirical adequacy in Spanish input-output data for the years 2010, 2015 and 2016. Estimates of direct prices and prices of production are used to measure their respective proximity, as well as the distance from each to market prices. The classical/Marxian system of prices of production is also subjected to testing for the possibility of pronounced price curvature. The results suggest that all three sets of prices are significantly close to each other, thereby strengthening the empirical support for the cross-sectional hypothesis derived from such account of relative prices. In addition, the evidence gathered from the Spanish economy does not support the case for twisted price curves as an empirically relevant phenomenon.
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