A Neo-Austrian perspective on the value of growth prospects

Andrea Mantovi () and A. Schianchi ()

No 2015-EP01, Economics Department Working Papers from Department of Economics, Parma University (Italy)

Abstract: The valuation framework inherent to the neo-Austrian theory of capital set forth by Hicks’ (1973) is discussed in terms of a fundamental formula which disentangles the profitability associated with the scale of operation from the internal rate of return of the production process. The formula is employed to tailor a perspective on the value of investment prospects, meant to complement the insights embodied by Tobin’s q metric. Balance sheet recessions are briefly discussed as a cogent line of application of our formula. Potential lines of progress are envisioned.

Keywords: Neo-Austrian Capital Theory; Convolution Theorem; Investment; Tobin’s q. (search for similar items in EconPapers)
JEL-codes: D92 O12 O40 (search for similar items in EconPapers)
Pages: 24
Date: 2015
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Working Paper: A Neo-Austrian Perspective on the Value of Growth Prospects (2015)
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