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A Neo-Austrian perspective on the value of growth prospects

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  • A. Mantovi
  • A. Schianchi

Abstract

The valuation framework inherent to the neo-Austrian theory of capital set forth by Hicks’ (1973) is discussed in terms of a fundamental formula which disentangles the profitability associated with the scale of operation from the internal rate of return of the production process. The formula is employed to tailor a perspective on the value of investment prospects, meant to complement the insights embodied by Tobin’s q metric. Balance sheet recessions are briefly discussed as a cogent line of application of our formula. Potential lines of progress are envisioned.

Suggested Citation

  • A. Mantovi & A. Schianchi, 2015. "A Neo-Austrian perspective on the value of growth prospects," Economics Department Working Papers 2015-EP01, Department of Economics, Parma University (Italy).
    • Handle: RePEc:par:dipeco:2015-ep01
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Neo-Austrian Capital Theory; Convolution Theorem; Investment; Tobin’s q.;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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