Journal Article The Pasinetti Paradox in Neoclassical and More General Models Get access Paul A. Samuelson, Paul A. Samuelson Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar Franco Modigliani Franco Modigliani Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 33, Issue 4, October 1966, Pages 269–301, https://doi.org/10.2307/2974425 Published: 01 October 1966

A model of the tax structure of interest rates is developed and simple approximate expressions relating yield to coupon are derived. The effect on these simple expressions of alternative assumptions about holding period length, expectations of future interest rates, and other factors, is evaluated. It is shown that with recent U.S. yield averages the new-seasoned yield spread varies with the new-seasoned coupon spread as the theory prescribes. It is concluded that new issue yield averages should provide a more reliable measure of the cost of debt capital than is provided by seasoned yield averages.