Keeping land in capital theory: Ricardo, Faustmann, Wicksell and George

American Journal of Economics and Sociology, The,  Jan, 2008  by Mason Gaffney

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By MASON GAFFNEY, The author is Professor of Economics at the University of California, Riverside.

This paper was originally written for the annual meeting of the History of Economics Society (HES), Grinnell College, June 25, 2006. The writer thanks Robert Dimand for generous references to the literature; Mary M. Cleveland for editorial advice; and Marianne Johnson for insightful suggestions about integrating the materials.

Table 1

n     Harvest time
i     Interest rate
SFF   Sinking fund factor
P     Planting cost
S     Stumpage (net sale value)
NS    Net stumpage = -[Pe.sup.in] + S
B     Ground rent

Table 2
The SFF = i / [[e.sup.in] - 1] (as a Percentage, Rounded) with
Different Values of the Interest Rate i and the Term n

i(%)\ n[right arrow]     5      10     20     50

0.1                    19.95   9.95   4.95   1.95
0.5                    19.75   9.75   4.75   1.76
1                      19.50   9.51   4.52   1.54
3                      18.54   8.57   3.65   0.86
5                      17.60   7.71   2.91   0.45
10                     15.41   5.82   1.57   0.07

Table 3
1 / ([e.sup.in] - 1) as a Function of Interest Rates, i, and
Lifespans, n

i\n      10        20        30

2%     451.67%   203.32%   121.64%
4%     203.32%    81.60%    43.10%
8%      81.60%    25.30%     9.98%
12%     43.10%     9.98%     2.81%
16%     25.30%     4.25%     0.83%
20%     15.65%     1.87%     0.2

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