Chapter

The Process and Its Profiles

John Hicks

in Capital and Time

Published in print October 1987 | ISBN: 9780198772866
Published online November 2003 | e-ISBN: 9780191596414 | DOI: http://dx.doi.org/10.1093/0198772866.003.0002
 The Process and Its Profiles

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This chapter begins with a discussion of the productive process, which is defined as a scheme by which a flow of inputs is converted into a flow of outputs. It then examines the viability of time-shapes, considering the conditions that must be satisfied by the time-profile of a process in order that it should be viable. The chapter presents a Fundamental Theorem and argues that if capitalization is performed at the rate of interest which belongs to the process, the forward measures of capital are the same. But if a process with yield that is greater than the market rate of interest is considered — and if the discounting (and accumulating) at the market rate of interest is performed — the value of capital, measured forward, will be greater than the backward (or cost) measure, at every stage of the process.

Keywords: productive process; time-shapes; flow; capital; interest; Fundamental Theorem

Chapter.  5415 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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