Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Econometric analysis for assessing the efficacy of public investment / R. Dorman, Harvard University - Cambridge, Mass. - U.S.A.

Collection:: Economics Books

200 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - - construction cost is only a partial offset; it is much easier generally to make a plausible guess at an allowable construction cost than to guess at an efficient output level. Another advant- age is that there is some obscurity about the proper costs to minimize in the cost minimization approach. The most plaus- ible choice is total cost — the cost used in the denominator of a conventional benefit-cost ratio — but this kind of cost does not constitute a drain on any definable scarce resource, it is an amalgam of construction costs in the near future and operating costs extending through the life of the project. The present value of the monetary net benefit stream has much more appeal as the dimension of performance to be singled out for special treatment. The net benefit maximization approach also leads to shadow prices, which may be even more usefully interpretable than the shadow prices yielded by cost minimization. One of the shadow prices will pertain to the construction cost constraint. This price should surely be approximately the same for all projects that are to be initiated in any brief time period, thus facilitating inter-project comparisons and allocations. My entire discussion has concentrated on the problem of incommensurable benefits. There are also often incommensur- able costs, and these can be handled in precisely the same way: by establishing target levels and revising them in the light of trial results. A few special cases of costs not measured ade- quately in dollar terms deserve explicit mention. These are all cases in which, perversely, a dollar is not worth a dollar. Foreign exchange drain is an obvious instance: a country may well be willing to forego more than a dollar in discounted net benefits to save a dollar in foreign exchange. Inflationary budgetary impact is another case. Most public investments require heavy expenditures in some pattern extending over a number of years. Anticipated budgetary tightness or inflation- ary pressure may well be substantially different in some years in the near future than in others. In such a case. total con- 3] Dorfman - pag. 14

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