Uses and Abuses of User Cost: Jorgenson’s Capital Gain Confusion

17 Pages Posted: 17 Jun 2009 Last revised: 29 Jun 2015

Hak Choi

Chienkuo Technology University - Department of International Business; Chung-Hua Institution for Economic Research

Date Written: June 1, 2009

Abstract

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.

Keywords: User cost, Investment decision, Profit, Income

JEL Classification: D24, E60

Suggested Citation

Choi, Hak, Uses and Abuses of User Cost: Jorgenson’s Capital Gain Confusion (June 1, 2009). Available at SSRN: https://ssrn.com/abstract=1419090 or http://dx.doi.org/10.2139/ssrn.1419090

Hak Choi (Contact Author)

Chienkuo Technology University - Department of International Business ( email )

No.1, Chiehsou N. Road
Changhua City, 500
Taiwan
+886 91 901-4618 (Phone)

HOME PAGE: http://euntold.wordpress.com

Chung-Hua Institution for Economic Research ( email )

75, Changhsin St.
Taipei
Taiwan

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