17 Pages Posted: 17 Jun 2009 Last revised: 29 Jun 2015
Date Written: 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.
Keywords: User cost, Investment decision, Profit, Income
JEL Classification: D24, E60
Suggested Citation: Suggested Citation