Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 727: Dynamic cost-benefit analysis of large projects: The role of capital and investment costs

Chuan-Zhong Li () and Karl-Gustaf Löfgren ()
Additional contact information
Chuan-Zhong Li: Uppsala University, Box 513, Postal: Se-75120 Uppsala, Sweden
Karl-Gustaf Löfgren: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: Based on an ideal index for de.ating after-project prices, we derive a dynamic cost-bene.t rule for evaluating large projects. We show that, in addition to the conventional income and consumer surplus meaures, the rule also entails an extra term involving capital and investment cost changes.

Keywords: cost-benefit rules; large projects; capital costs

JEL-codes: D60; D90; Q20; Q40

8 pages, February 1, 2008

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