Marginal efficiency of capital


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Marginal efficiency of capital

The percentage yield earned on an additional unit of capital.

Marginal Efficiency of Capital

The extra yield that an investor earns for each additional dollar of capital invested in the venture or security. The marginal efficiency of capital helps measure how much investment capital is worth the risk at a given return. It is also called marginal productivity of capital.
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143) argues that the business cycle is caused by fluctuations in the marginal efficiency of capital. Investment is unstable because of the uncertainty underlying investors' cash flow expectations.
Garrison on Keynes
would have to consider if it adopted the microeconomic approach to price control in a competitive industry, namely, the allocation of investment between firms in the industry, a policy which Keynes perhaps foresaw when he wrote: 'I expect to see the State, which is in a position to calculate the marginal efficiency of capital on long views and on the basis of the general social advantage, taking an even greater responsibility for directly organising investment' (Keynes 1936: 164).
Price control, investment and resource allocation
He eventually accuses Mises of "confusing the marginal efficiency of capital with the rate of interest" (1936, p.193).
Contrasting concepts of capital: yet another look at the Hayek-Keynes debate
The marginal propensity to consume, the marginal efficiency of capital, and the liquidity preference are the key determinants of the level of employment.
Successful knowledge management strategies and global market trends
as being occasioned by a cyclical change in the marginal efficiency of capital' (p313).
Deng Xiaoping and John Maynard Keynes: China's economic success is continuing testimony to the efficacy of Keynesianism
Second, when calculating the marginal efficiency of capital probability distributions come into play.
The research agenda that emerged from the General Theory
Keynes (1936) argued that the "marginal efficiency of capital" could be computed as the discount rate that makes the present value of the returns on an asset equal to its current price and that it was equivalent to Fisher's rate of return on an investment.
2 Discounted cash flow valuation
In Keynes' book, The General Theory of Employment Interest and Money, he advanced the concept of the "marginal efficiency of capital".
Many happy returns
But I now read these discussions as an honest intellectual effort to keep separate what the classical theory has inextricably confused together, namely, the rate of interest and the marginal efficiency of capital. For it now seems clear that the disquisitions of the schoolmen were directed towards the elucidation of a formula which should allow the schedule of marginal efficiency of capital to be high, whilst using rule and custom and the moral law to keep down the rate of interest.(23)
Bernard Dempsey's theological economics: usury, profit, and human fulfillment
The independent determinants of the level of employment, therefore, are the propensity to consume and the inducement to invest, which is the relationship between the marginal efficiency of capital and the interest rate.
John Maynard Keynes and Alvin Hansen: contrasting methodologies and policies for social economics
This paper is a rejoinder to "The Marginal Efficiency of Capital: Comment" by Lucas M.
The marginal efficiency of capital: Rejoinder
In Keynes" analysis the independent variables are the rate of interest, the marginal efficiency of capital and the marginal propensity to consume.
Keynes vs the Keynesians: Keynes rediscovered

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