Journal of Libertarian Studies - Single Articles

The Journal of Libertarian Studies was founded by Murray N. Rothbard in 1977 and is the premiere venue for the advancement of libertarianism, anarcho-capitalism, the individualist society, and non-interventionism as the first principle of political theory and practice.

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Lucas M. Engelhardt

ABSTRACT: The impact of interest rates on investment choices is a key element in both Keynesian and Austrian theories of the business cycle. Fuller (2013) compares the Keynesian Marginal Efficiency of Capital approach to the Austrian Net Present Value approach, claiming that the two give different rankings of investment projects. This comment provides examples to show that this is only true if factor prices are held constant. If factor prices reflect the discounted present value of the project, then the different rankings between the approaches vanishes. This result further highlights a fundamental difference between the Austrian and Keynesian views: factor price stickiness. This difference in assumptions drives the opposing views of monetary policy.