Savings, Investment and Capital in a System of General Intertemporal Equilibrium

The paper argues that general intertemporal equilibria, while avoiding ‘capital’ as a single quantity among factor endowments, depend on a similar notion through investment demand and savings supply. With the help of a simple model (the same one used by Hahn, 1982, to counter the capital theory critique), the paper brings out the equality of saving and investment decisions implied, for each period, in an intertemporal equilibrium. This makes it possible to see the presence in such an equilibrium of a ‘quantity of capital’ as a value magnitude in the flow form of savings supply and investment demand, which encounters difficulties related to its dependence on the price system comparable to those found in the long-period versions of general equilibrium.