> >The profit rate that the BEA measures seems to be in the > same general league > >as the "marginal efficiency of investment" of Keynesian > theory (or Marx's > >rate of profit, for that matter). The MEI is compared to the > interest rate, > >so if MEI > i, the incentive to invest is there. If we > exclude interest, > >this kind of comparison is harder. (Of course, the actual > MEI would involve > >_expected_ profitability.) > > If you really want to get snazzy, you've got to compute a cost of > capital, which includes the cost of equity, via the capital asset > pricing model. That's how the big boys do their capital budgeting. >
I'm trying to lose weight, so as to avoid being too big a boy. JD
