A note on re-switching and the neo-Austrian concept of the average period of production

Saverio Fratini

MPRA Paper from University Library of Munich, Germany

Abstract: The neo-Austrian average period of production is calculated by taking the shares of costs referable to each period out of the total amount of costs as weights. Once this notion had been introduced, its inverse relationship with the rate of interest prompted some scholars to believe that it could serve as a good measure of capital intensity. As will be shown, however, this new average period poses some problems. On the one hand, the inverse relationship mentioned above does not preclude the re-switching of production methods. On the other, if re-switching occurs, the most roundabout method may paradoxically be the one that gives the smallest net output per worker. This result can affect the revival of the Austrian business-cycle theory.

Keywords: average period of production; degree of roundaboutness; capital; re-switching; Austrian business-cycle theory (search for similar items in EconPapers)
JEL-codes: B25 B53 D24 D33 E32 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-hme and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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