The Review of Economics and Statistics Vol. 53 No. 1 1971
Cyclical Behavior of Help-Wanted Index and the Unemployment Rate: A Reply
Abstract
gives opportunity-cost/marginal-product meanings to the factor prices. Unfortunately, this is not good enough. If one wants to compute social costs of a project in terms of the economy's long-run equilibrium, then the project's physical factor requirements should also be computed in this framework, allowing for the factor-substitution possibilities which exist in the long run and which are instrumental in assuring positive marginal products for all the primary resources. To conclude, while we agree with HK that in the presence of unemployed resources money expenditures on a project overestimate social costs, we do not believe (for the reasons given in this note) that the HK model allows computation of the correct adjustments.10
- DOI
- 10.2307/1925388
- Volume
- 53
- Issue
- 1
- Pages
- 105
- Sources
- openalex crossref