The Choice of Technique with Multiple and Complex Interest Rates

Robert L. Vienneau

Review of Political Economy, 2017, vol. 29, issue 3, 440-453

Abstract: This article clarifies the relationships between internal rates of return (IRR), net present value (NPV), 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 reswitching.

Date: 2017
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DOI: 10.1080/09538259.2017.1346039

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