Accession Number : AD0762043

Title :   The Quantitative Theory of Interest.

Descriptive Note : Research rept.,

Corporate Author : CALIFORNIA UNIV BERKELEY OPERATIONS RESEARCH CENTER

Personal Author(s) : Rockwell,Richard

Report Date : APR 1973

Pagination or Media Count : 37

Abstract : A theorem due to Starrett asserts that efficient proportional economic programs which grow at a rate sigma must have competitive proportional prices whose interest rate is at least sigma. The author calls this the qualitative theorem. In the paper, it is desired to further interpret the size of the interest rate by relating it to borrowing and lending rates which are defined without respect to prices. An economic model is used similar to the one given by Malinvaud but with the addition of consumers. The main result is the equality of the lending (respectively borrowing) rate and the maximum (respectively minimum) interest rate. The author calls this the quantitative theorem. The quantitative theorem is used to prove a slightly generalized version of the qualitative theorem. The final section gives examples which use the theory of interest to illustrate the effect of consumer preferences on efficiency.

Descriptors :   (*ECONOMICS, MATHEMATICAL MODELS), CONVEX SETS, MATHEMATICAL PROGRAMMING, THEOREMS

Subject Categories : Economics and Cost Analysis
      Operations Research

Distribution Statement : APPROVED FOR PUBLIC RELEASE