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Multiple-Interest-Rate Analysis Sheds Light on the Reswitching Phenomenon

Michael Osborne ()

Chapter 7 in Multiple Interest Rate Analysis: Theory and Applications, 2014, pp 92-104 from Palgrave Macmillan

Abstract: Abstract When two present values are compared, reswitching occurs when one present value is lowest at low interest rates, switches to being more expensive at higher rates, and then reswitches to being cheapest again at yet higher rates. Some economists argue that the reswitching phenomenon undermines neoclassical economics. Multipleinterest- rate analysis applied to the reswitching equation leads to its dual expression. The dual expression sheds new light on the phenomenon.

Keywords: Cambridge; capital; complex plane; controversies; interest rate; multiple; reswitching (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1057/9781137372772_7

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Handle: RePEc:pal:palchp:978-1-137-37277-2_7