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After The Cambridge Controversies: Reflections Old And New, Harvey Gram

Publications and Research

Perfect foresight is a consequence of applying the Pontryagin Maximum Principle to the analysis of an intertemporal general equilibrium. For this reason, the capital theory controversy ended in an intellectual impasse. The critique of mainstream theory largely ignored the perfect foresight entailments of intertemporal equilibrium analysis, while its defenders, with notable exceptions, too often failed to acknowledge this implication of the technique of dynamic programming. From this standpoint, the long debate over the existence or non-existence of an aggregate production function is secondary. This leaves open the theoretical question of how to proceed with an analysis of the actual dynamics …