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Measure of Capital in Böhm-Bawerk's Flow Input Model

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Authors
Hong, Keehyun
Issue Date
1990-04
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.3 No.2, pp. 159-178
Keywords
roundaboutnessaverage periodHahn
Abstract
One of the shortcomings of Böhm-Bawerk's capital theory is

his neglect of the compound interest rate in the calculation of

the value of capital. However, this paper shows that the introduction

of the compound interest rate itself may not invalidate

his assertion that the increase of value of capital will lengthen

the production period and thus decrease the interest rate, if

there exists a sensible measure of the "roundaboutness", as is

the case with Böhm-Bawerk uniform flow input model. The fundamental

problem with Böhm-Bawerk is that the average production

period cannot serve as a sensible measure of capital

under a general time distribution with multiple parameters, contrary

to his conjecture. An alternative measure of production

period under less restrictive conditions is also suggested with a

textual evidence.
ISSN
1225-0279
Language
English
URI
https://hdl.handle.net/10371/892
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of Economics (SJE)Seoul Journal of Economics vol.03(2) (Summer 1990)
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