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The Review of Austrian Economics

, Volume 32, Issue 4, pp 363–374 | Cite as

A note on re-switching, the average period of production and the Austrian business-cycle theory

  • Saverio M. FratiniEmail author
Article

Abstract

According to a new formulation, the average period of production is calculated by taking the shares of costs referable to each period out of the total amount of costs as weights. Once this notion had been introduced, its inverse relationship with the rate of interest prompted some scholars to believe that it could serve as a good measure of capital intensity, expecially in view of a possible resumption of the Austrian business-cycle theory. As will be shown, however, this new average period poses some problems. On the one hand, the inverse relationship mentioned above does not preclude the re-switching of production methods. On the other, if re-switching occurs, the most roundabout method may paradoxically be the one that gives the smallest net output per worker. This result can affect the revival of the Austrian business-cycle theory.

Keywords

Average period of production Degree of roundaboutness Capital Re-switching Austrian business-cycle theory 

JEL classification

B25 B53 D24 D33, E32 

Notes

Acknowledgements

Thanks are due to C. Gehrke, G.C. Harcourt, H.D. Kurz and two anonymous referees for comments and suggestions. The usual caveat applies.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Dipartimento di EconomiaUniversità di Roma TreRomeItaly

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