A Note on the Bohm-Bawerk/ Wicksell Theory of Interest.
One of the most famous developments in the history of economic thought is the theory of Bohm-Bawerk, as formalized by Wicksell, that relates the wage rate (w), the value of capital stock (K), the rate of interest (r), and the "period of production" (θ) in the stationary state. Dorfman has recently g...
| Publicado en: | Review of Economic Studies Vol. 34; no. 2; pp. 191 - 200 |
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| Formato: | Artículo |
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Oxford University Press / USA
Apr67
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=hlh&AN=4622246&site=ehost-live header: @attributes: shortDbName: hlh uiTerm: 4622246 longDbName: Humanities International Complete uiTag: AN controlInfo: bkinfo: jinfo: jid: 00346527 REM jtl: Review of Economic Studies issn: 00346527 maglogo: N pubinfo: dt: Apr67 vid: 34 iid: 2 pid: 622 pub: Oxford University Press / USA artinfo: ui: 4622246 ppf: 191 ppct: 9 formats: tig: atl: A Note on the Bohm-Bawerk/ Wicksell Theory of Interest. aug: au: Hirschleifer, J. affil: University of California, Los Angeles su: Interest rates Interest (Finance) Economic indicators Wages Labor market Theory sug: subj: Interest rates Interest (Finance) Economic indicators Wages Labor market Theory ab: One of the most famous developments in the history of economic thought is the theory of Bohm-Bawerk, as formalized by Wicksell, that relates the wage rate (w), the value of capital stock (K), the rate of interest (r), and the "period of production" (θ) in the stationary state. Dorfman has recently given a concise and instructive exposition of this system. Part I of this paper provides, on an elementary level, a critical interpretation of the Bohm-Bawerk/Wicksell system, leading (in increasing order of importance) to the following conclusions: (1) That the approximation error in the Bohm-Bawerk/Wicksell capital-value formula is of far from negligible magnitude. (2) That Wicksell's formalization constitutes an under-determined system, an incomplete theoretical structure. (3) And, consequently, that the system is not a theory of interest; rather than determining the rate of interest, the equation system is consistent with any arbitrarilyimposed exogenous interest rate. After some discussion of the nature of the analytical errors involved, in Part II the BohmBawerk/Wicksell system will be formally completed by bringing in time-preference considerations. A numerical example will be provided as an aid to intuition. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: Y dt: @attributes: year: 1967 holdings: @attributes: islocal: N |
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