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


  • Fratini, Saverio M.


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.

Suggested Citation

  • Fratini, Saverio M., 2018. "A note on re-switching and the neo-Austrian concept of the average period of production," MPRA Paper 87306, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87306

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    References listed on IDEAS

    1. Edmond Malinvaud, 2003. "The Legacy of Knut Wicksell to Capital Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 507-525, December.
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    6. Saverio M. Fratini, 2014. "The Hicks-Malinvaud average period of production and 'marginal productivity': A critical assessment," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 21(1), pages 142-157, February.
    7. Heinz D. Kurz, 2015. "Capital Theory, Crises, and Business Cycles: The Triangular Debate between Hayek, Keynes, and Sraffa," Journal of Reviews on Global Economics, Lifescience Global, vol. 4, pages 186-191.
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    12. Harald Hagemann & Heinz D. Kurz, 1976. "The Return Of The Same Truncation Period And Reswitching Of Techniques In Neo‐Austrian And More General Models," Kyklos, Wiley Blackwell, vol. 29(4), pages 678-708, January.
    13. Kurz,Heinz D. (ed.), 2000. "Critical Essays on Piero Sraffa's Legacy in Economics," Cambridge Books, Cambridge University Press, number 9780521580892.
    14. Fratini, Saverio M., 2012. "Malinvaud on Wicksell’s legacy to capital theory: some critical remarks," MPRA Paper 39574, University Library of Munich, Germany.
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    More about this item


    average period of production; degree of roundaboutness; capital; re-switching; Austrian business-cycle theory;

    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
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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