The Capital Growth Model: An Empirical Investigation

Abstract

Modern micro-capital theory offers three major alternative choice theoretic approaches from which a set of market equilibrium prices can be derived. These approaches are:1. Time-state preference theory of Arrow [1] and Debreu [6],2. The capital asset pricing model (hereafter CAPM) of Sharpe [34], Lintner [23], and Fama [7],3. The capital growth model of Kelly [16], Breiman [5], and Latané [17]