Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Investments: Investments refer to assets acquired with the expectation of generating income or appreciating in value over time. They encompass various vehicles such as stocks, bonds, real estate, and commodities. The aim is to achieve future financial gain through capital appreciation, dividends, interest, or rental income. See also Income, Economy, Value theory, Interest rates, Dicisions, Decision-making processes, Assets._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
John Maynard Keynes on Investments - Dictionary of Arguments
Kurz I 110 Investments/Keynes/Kurz: (…) The different qualities of land can also be ranked according to the rent they yield per acre; this ranking is known as the order of rentability. It has Kurz I 110 commonly been assumed that both orders are independent of income distribution and that they coincide. >Marginal Efficiency of Capital/Keynes. SraffaVsKeynes: In the late 1920s, Sraffa showed that this is true only in exceedingly special cases. In general, both orders depend on the rate of interest and do not coincide (see also Kurz and Salvadori 1995, chap. 10)(1). Sraffa’s findings have a direct bearing on Keynes’s investment demand schedule and his closely related view as regards the long-period relationship between the overall capital-labor ratio and the rate of return on capital. Both as regards the short and the long period, Keynes had fallen victim to the “monotonic prejudice” (see Gehrke and Kurz 2006)(2). As regards the former, with a change in the rate of interest it cannot be presumed that the ranking of investment projects will remain the same, because both expected gross revenues and costs will generally be affected by the change. The ranking of investment projects in a descending order of marginal efficiency is thus no less dependent on the rate of interest than the ranking of different qualities of land in terms of “fertility.” As regards the long period, there is no presumption that an increase in the capital-labor ratio is invariably accompanied by a decrease in the marginal efficiency of capital in general, as Keynes contended (see, e.g., CWK 7, p. 136)(3). 1. Kurz, H. D. and Salvadori, N. (1995). Theory of Production. A Long-period Analysis, Cambridge: Cambridge University Press. (Paperback edn 1997.) 2. Gehrke, C. and Kurz, H. D. (2006). “Sraffa on von Bortkiewicz: Reconstructing the Classical Theory of Value and Distribution,” History of Political Economy, 38:1, 91 -149. 3. Keynes, J. M. (1971–1989). The Collected Writings of John Maynard Keynes, D. Moggridge (ed.), London: Macmillan. Kurz, Heinz D. „Keynes, Sraffa, and the latter’s “secret skepticism“. In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge. - - - Rothbard III 859 Investments/Keynes/Rothbard: Keynesians have differed on the causal determinants of investment. Originally, Keynes determined it by the interest rate as compared with the marginal effciency of capital, or prospect for net return. The interest rate is supposed to be determined by the money relation; we have seen that this idea is fallacious. RothbardVs: Actually, the equilibrium net rate of return is the interest rate, the natural rate to which the bond rate conforms. Rather than changes in the interest rate causing changes in investment (…) changes in time preference are reflected in changes in consumption-investment decisions. Changes in the interest rate and in investment are two sides of a coin, both determined by individual valuations and time preferences. PigouVsKeynsianism: The error of calling the interest rate the cause of investment changes, and itself determined by the money relation, is also adopted by such "critics" of the Keynesian system as Pigou, Who asserts that falling prices will release enough cash to Iower the interest rate, stimulate investment, and thus finally restore full employment. Keynesianism: Modern Keynesians have tended to abandon the intricacies of the relation between interest and investment and simply declare themselves agnostic on the factors determining investment. They rest their case on an alleged determination of consumption.(1) >Consumption function, >Consumption/Keynesianism. 1. Some Keynesians account for investment by the "acceleration principle". The Hansen "stagnation" thesis - that investment is determined by population growth, the rate of technological improvement, etc. - seems happily to be a thing of the past._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconKeyn I John Maynard Keynes The Economic Consequences of the Peace New York 1920 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
||
> Counter arguments against Keynes
> Counter arguments in relation to Investments
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
