BOEHM-BAWERK PERIOD OF PRODUCTION *

The Boehm-Bawerk period of production, one of the most original and also most controversial contributions of the Austrian school, has had a very uneven career in the history of economic doctrines. It was originally conceived as a macroeconomic concept and, from this point of view perhaps, remains doubtful to this day. The following note will claim that there is at least some validity to the idea of the period of production, if it is examined from the microeconomic point of view as simply the time elapsed from the beginning of the production of a given commodity to the end product. We first consider a single commodity and assume a linear dynamic system of production. We show that under certain conditions fluctuations in the quantity produced may occur, whose period of fluctuations corresponds to the period of production. We consider next the problem of aggregation. On the basis of the idea of consistent aggregation, we show that in this case a method of aggregation exists that is equivalent to the idea of aggregation with the help of principal components. Next, we contemplate the case of several interrelated commodities. The special model we investigate is again linear and dynamic, but block triangular. By this we mean that the sectors of the economy can be arranged in such a fashion that higher sectors depend upon the products of lower sectors; but the opposite is not the case. Such models have been used in empirical econometric work. In this case again, possible cyclical fluctuations may exist, and their period corresponds to the period of production of the individual commodities produced in the various sectors. Finally, we make an effort to relate the model to recent discussions in capital theory.