Capital in Disequilibrium

Capital in Disequilibrium Capital in Disequilibrium The Role of Capital in a Changing World

Capital in Disequilibrium : the role of Capital in a Changing WorlD ( 2 nD eD . )

P Lewin’s Capital in Disequilibrium is an award-winning, extensive survey of capital theory, which touches on and summarizes an array of issues and phenomena. It fearlessly dives into the depths of the vast and shifting literatures available on each of the topics. Lewin, a former student of renowned Austrian capital theorist Ludwig Lachmann, guides the reader through both the history and parall...

Correct or incorrect application of CAPM? Correct or incorrect decisions with CAPM?

This paper focuses on inconsistencies arising from the use of NPV and CAPM for capital budgeting. It shows that (i) CAPM capital budgeting decision-making based on disequilibrium NPV is deductively inferred by the Capital Asset Pricing Model, (ii) the use of the disequilibrium NPV is widespread in finance both as a decision rule and as a valuation tool, (iii) the disequilibrium NPV does not gua...

Coffee, economic fluctuations and stabilisation: an intertemporal disequilibrium model with capital market imperfections

This paper develops a two-period disequilibrium model of a small open economy under Keynesian unemployment to analyse the effects of temporary, anticipated, and permanent coffee price shocks. The model includes a government sector that administers a commodity price stabilisation fund, and allows for capital market imperfections. The type of capital market imperfection makes an important differe...

CAPM-based capital budgeting and nonadditivity

This paper deals with the CAPM-derived capital budgeting criterion, and in particular with Rubinstein’s (1973) criterion, according to which a project is profitable if the project rate of return is greater than the risk-adjusted cost of capital, where the latter depends on the project’s disequilibrium systematic risk. It is shown that the disequilibrium net present value implied by this criteri...