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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A sudden collapse of the marginal efficiency of capital starts the cycle.
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
While Keynes supported deficit spending, he knew that the cause of recession lay in more fundamental factors affecting investment, which in turn were affected by interest rates: 'the succession of boom and slump can be described and analysed in terms of the fluctuations of the marginal efficiency of capital relatively to the rate of interest' (p144).
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
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.
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
Engelhardt attempts to show that Keynes's Marginal Efficiency of Capital (MEC) and the Net Present Value (NPV) always give identical rankings if factor prices are flexible.
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
Increased confidence about future economic performance will raise the qs on capital while lowering the subjective values assigned to liquid positions (hence, the l falls), so that the marginal efficiency of capital rises relative to that of assets that get much of their return from I.
Keynes's approach to money: an assessment after seventy years
Recovery might be generated if the rate of interest were to decline at a speed "sufficiently rapid" to bring it below the currently low marginal efficiency of capital.
Marx and Keynes: alternative views on capitalism?
Fuller (2013) compared the Keynesian Marginal Efficiency of Capital approach with the Austrian Net Present Value approach.
The marginal efficiency of capital: a comment
Indeed, Ricardo's distinction between the bank rate and the profit rate may fairly be considered a precursor of Wicksell's distinction between the natural and the money rates of interest as well as Keynes' distinction between the marginal efficiency of capital and the rate of interest in financial markets.
Ricardo and Keynes on war finance

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