[OPE-L:5348] Re: Ernst & the RRI

John R. Ernst (ernst@pipeline.com)
Sat, 19 Jul 1997 10:52:21 -0700 (PDT)

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Among other things in OPE-L 5327, I wrote:

>2. For me, it is unclear why the "echo effects will become relatively
>smaller and smaller over time" if investment as a proportion of capital
>remains constant or increases over time. My crude examination of the
>data in the back of Dumenil and Levy tells me that the proportion is
>more or less constant over time.

In OPE-L 5335, Duncan commented:

The proportion of investment is roughly constant over time, but the whole
economy grows, so the proportion of investment represented by replacement
of capital n years back constantly shrinks.

I now add:

If the proportion of investment is constant over time, why isn't the
proportion earmarked for replacement "roughly" constant over time?
That is, while I agree there is growth and investment, I'm unclear
about why there would be a diminishing proportion of gross investment
designated for replacement.