Uses and Abuses of User Cost: Jorgenson Capital Gain Confusion
Chienkuo Technology University - Department of International Business; Chung-Hua Institution for Economic Research
June 1, 2009
User cost has been widely misunderstood in the Economics literature. This paper reveals a mathematical mistake in Jorgenson’s derivation of user cost. It then proves that Keynes’ original intention of introducing this concept is to bring up the correct measures of income and profit. The correct user cost concept thus provides more exact considerations for investment decisions.
Number of Pages in PDF File: 17
Keywords: User cost, Investment decision, Profit, Income
JEL Classification: D24, E60
Date posted: June 17, 2009 ; Last revised: May 19, 2014
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