IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpep/v2016y2016i2id555p202-220.html
   My bibliography  Save this article

Fisher and Mises on Zero Interest: A Reconsideration

Author

Listed:
  • Pavel Potužák

Abstract

This article demonstrates that the pure time-preference theory of Ludwig von Mises is inconsistent. A productivity element is studied in the Fisher model, and it is shown that time preference is neither a necessary nor a sufficient condition for the existence of interest. An attempt is also made to reconcile the Austrian theory with the neoclassical theory of interest. It is suggested that the key difference lies in the definition of interest as such, and it is concluded that the Austrian theory is only a special case of a more general neoclassical framework.

Suggested Citation

  • Pavel Potužák, 2016. "Fisher and Mises on Zero Interest: A Reconsideration," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(2), pages 203-220.
    • Handle: RePEc:prg:jnlpep:v:2016:y:2016:i:2:id:555:p:202-220
    DOI: 10.18267/j.pep.555
    as

    Download full text from publisher

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.555.html
    Download Restriction: free of charge
    File URL: http://pep.vse.cz/doi/10.18267/j.pep.555.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.pep.555?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gilbert Ghez & Gary S. Becker, 1975. "A Theory of the Allocation of Time and Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 1-45, National Bureau of Economic Research, Inc.
    2. Olson, Mancur & Bailey, Martin J, 1981. "Positive Time Preference," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 1-25, February.
    3. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 83-132, National Bureau of Economic Research, Inc.
    4. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time and Goods over the Life Cycle," NBER Books, National Bureau of Economic Research, Inc, number ghez75-1, March.
    5. Harry G. Brown, 1913. "The Marginal Productivity Versus the Impatience Theory of Interest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 27(4), pages 630-650.
    6. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 46-82, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pavel Potu?ák, 2021. "The Optimum Allocation of Consumption of the Fisherian Shipwrecked Sailors," International Journal of Economic Sciences, European Research Center, vol. 10(2), pages 114-125, December.
    2. Pavel Potužák, 2018. "Stimuluje spotřebu v situaci nulové nominální úrokové míry zvýšení inflačních očekávání? [Does an Increase in Inflation Expectations Stimulate Consumption at the Zero Lower Bound?]," Politická ekonomie, Prague University of Economics and Business, vol. 2018(6), pages 751-775.
    3. Pavel Potužák, 2021. "The Optimum Allocation of Consumption of the Fisherian Shipwrecked Sailors," International Journal of Economic Sciences, European Research Center, vol. 10(2), pages 115-126, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pavel Potuzak, 2017. "Zero time preference and eternal postponement of consumption," Proceedings of Economics and Finance Conferences 4507367, International Institute of Social and Economic Sciences.
    2. Vasilev, Aleksandar, 2015. "Welfare gains from the adoption of proportional taxation in a general-equilibrium model with a grey economy: the case of Bulgaria's 2008 flat tax reform," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 48(2), pages 169-185.
    3. Feigenbaum, James, 2008. "Can mortality risk explain the consumption hump?," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 844-872, September.
    4. Aydilek, Asiye, 2016. "The allocation of time and puzzling profiles of the elderly," Economic Modelling, Elsevier, vol. 53(C), pages 515-526.
    5. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
    6. Julio Dávila & Jay H. Hong & Per Krusell & José‐Víctor Ríos‐Rull, 2012. "Constrained Efficiency in the Neoclassical Growth Model With Uninsurable Idiosyncratic Shocks," Econometrica, Econometric Society, vol. 80(6), pages 2431-2467, November.
    7. Gómez, Manuel A. & Monteiro, Goncalo, 2015. "Internal habits in an endogenous growth model with elastic labor supply," Economic Modelling, Elsevier, vol. 51(C), pages 583-595.
    8. Zhiyong An, 2010. "Stigma, Optimal Income Taxation, and the Optimal Welfare Program: A Numerical Simulation Approach," Public Finance Review, , vol. 38(1), pages 102-119, January.
    9. Almudena Sevilla & Jose Gimenez-Nadal & Jonathan Gershuny, 2012. "Leisure Inequality in the United States: 1965–2003," Demography, Springer;Population Association of America (PAA), vol. 49(3), pages 939-964, August.
    10. Pedro Nuno Teixeira, 2010. "Human Capital, by Gary S. Becker: A Reading Guide," Chapters, in: Ross B. Emmett (ed.), The Elgar Companion to the Chicago School of Economics, chapter 10, Edward Elgar Publishing.
    11. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    12. Toke Ward Petersen, 2001. "Indivisible Labor and the Welfare Effects of Labor Income Tax Reform," DREAM Working Paper Series 200102, Danish Rational Economic Agents Model, DREAM.
    13. Luigi Pistaferri, 2003. "Anticipated and Unanticipated Wage Changes, Wage Risk, and Intertemporal Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 729-754, July.
    14. Riccardo Colacito & Bridget Hoffmann & Toan Phan, 2019. "Temperature and Growth: A Panel Analysis of the United States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(2-3), pages 313-368, March.
    15. Dressler, Scott J. & Kersting, Erasmus K., 2015. "Excess reserves and economic activity," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 17-31.
    16. Boerma, Job & Karabarbounis, Loukas, 2020. "Labor market trends and the changing value of time," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    17. Gimenez-Nadal, Jose Ignacio & Sevilla, Almudena, 2012. "Trends in time allocation: A cross-country analysis," European Economic Review, Elsevier, vol. 56(6), pages 1338-1359.
    18. Bruce E. Kaufman, 2010. "Chicago and the Development of Twentieth-Century Labor Economics," Chapters, in: Ross B. Emmett (ed.), The Elgar Companion to the Chicago School of Economics, chapter 9, Edward Elgar Publishing.
    19. Egon Smeral, 2013. "Tourismus 2025: Entwicklungsperspektiven und Strategien für den ländlichen Raum," WIFO Studies, WIFO, number 47070, April.
    20. repec:dau:papers:123456789/4459 is not listed on IDEAS
    21. Aleksandar Vasilev, 2013. "On the cost of rent-seeking by government bureaucrats in a Real-Business-Cycle framework," Working Papers 2013_20, Business School - Economics, University of Glasgow.
    22. Claudia Goldin & Lawrence F. Katz, 2024. "The Incubator of Human Capital: The NBER and the Rise of the Human Capital Paradigm," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    zero lower bound; time-preference theory; theory of interest; productivity of capital; Mises; Fisher;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpep:v:2016:y:2016:i:2:id:555:p:202-220. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.