The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Capital and income

Collection:: Economics Books

Seo. T] CONCEPT OF RATE OF INTEREST 199 terest. This goes to explain why, in the actual market, the rate of interest for short-time loans fluctuates so much more widely than the rate of interest on long-time invest- ments. It is scarcely necessary to exhibit statistics to show this, though they are easily obtained by comparing the fluctuations in the rate of interest on short-term and long- term loans, in the United States or in England. We see, then, that the two concepts of interest rate, though definitely related,' are not always interchangeable. § 7 There is yet another device for indicating the terms of time exchanges. Besides the rates of interest and their reciprocals, the ratios of capitalization, there is the rate of discount. We have seen that if $104 due one year hence will buy $100 of present goods, then §¢ is the rate of ex- change between the two times and exceeds unity or par by 145, the rate of interest. The rate of exchange between the two times, when taken in the opposite direction, is 1§§ and this is less than unity or par by t&;. This deficiency, which amounts to 3.9 per cent, is called the rate of discount. The number representing the rate of discount is always slightly less than that representing the corresponding rate of interest.? The rate of discount is practically employed only for short-time loans, usually less than a year, in which cases it better serves the purposes of rapid computation. § 8 The present chapter may be briefly summarized as fol- lows: — First, the rate of interest is a special case of “value- return,” and may be approached from either of two stand- points, according as we consider it the price of capital in 1 See Appendix to Chap. XII, § 5. . ? For further discussion of the rate of discount, see Appendix to Chap. XII, §§ 6, 7.

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