Thursday, November 17, 2016

The Choice Of Technique With Multiple And Complex Interest Rates

I have expanded this post into a working paper. The abstract is:

Abstract: This paper clarifies the relationships between Internal Rates of Return, Net Present Value, and the analysis of the choice of technique in models of production analyzed during the Cambridge capital controversy. Multiple and possibly complex roots of polynomial equations defining the IRR are considered. An algorithm, using these multiple roots to calculate the NPV, justifies the traditional analysis of a reswitching example.

Michael Osborne, I hope, should find the working paper more constructive than my post.

(I do not know why, when I delete comments or mark them as spam, they still remain in the upper right.)

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