ABSTRACT
A distinction must be made between the older type of criterion, which simply applies what is thought to be an appropriate discount rate to the stream of benefits (positive or negative) in question, and a newer type of criterion, in which provision is made for the allocation of the resulting benefits of a project as between consumption and further investment. Although, in general, there may be different rates of time preference for the different groups affected by the project and also different yields on private investment according to risk, an analysis conducted in terms of such generality adds only an elegant complexity to the exposition that is more likely than not to obscure the basic outlines of the argument. If government borrowing for the public project has no effect or a negligible effect on interest rates, there may be no ‘crowding out’ of private investment and no reduction in current savings.
