Discussion of the Paper by Professor Fiszel

Michael Kaser and Richard Portes
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Michael Kaser: St Antony’s College
Richard Portes: Princeton University

A chapter in Planning and Market Relations, 1971, pp 196-203 from Palgrave Macmillan

Abstract: Abstract Professor Forte began by presenting a theoretical model which he wished to use in discussing the role of the interest rate in a planned economy. Figs 1A and 1B referred to the entire economy. The D curves in Fig. 1A gave the demand for investment in fixed capital as a function of the interest rate r. Demand at a given interest rate would equal the total cost of all investment projects offering a Fig 1A Commercial vehicle survey form rate of return at least equal to that interest rate. The planners would choose a rate of growth g; growth at that rate would require a certain level of investment in fixed capital; and the planners should set the interest rate so as to call forth that level of fixed capital expenditure C. The technique (capital intensity) chosen would be the most efficient one, and it would therefore give the maximum possible rate of growth for the given C. The IR curves in Fig. 1B related the rate of growth to the level of investment I. Investment here included circulating capital.

Keywords: Interest Rate; Discount Rate; Investment Project; Fixed Capital; Market Relation (search for similar items in EconPapers)
Date: 1971
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-15410-4_17

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DOI: 10.1007/978-1-349-15410-4_17

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