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Inflation And Cost-Benefit Analysis

Author

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  • Glenn Jenkins

    () (Queen's University, Kingston, On, Canada)

Abstract

One of the most frequent errors made in the preparation of investment project evaluations arises out of the improper accounting for the impact of inflation on the financial and economic performance of a potential project. In this case of commercial projects it is not uncommon to find the returns to the owner of the project (either private sector, government, or public enterprise) underestimated or overestimated by 50 percent or more simply as a result of the use of incorrect procedures in accounting for expected inflation. Similarly, in economic appraisals of projects, economists usually have ignored the financing and liquidity constraints which inflation imposes on the investment and operation of projects even when the realized rate of inflation is equal to the rate anticipated.

Suggested Citation

  • Glenn Jenkins, 1978. "Inflation And Cost-Benefit Analysis," Development Discussion Papers 1978-08, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:333
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    File URL: https://cri-world.com/publications/qed_dp_33.pdf
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    Cited by:

    1. Glenn Jenkins, 1981. "An International Comparative Analysis Of The Taxation Of The Steel Industry," Development Discussion Papers 1981-07, JDI Executive Programs.

    More about this item

    Keywords

    Cost-Benefit Analysis; Inflation;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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