The investment projects most sensitive to interest rates are those with long time horizons between investment and reward, because discounted cash flow analysis means future cash flows are heavily affected by the discount rate; therefore cheap credit makes long-term, roundabout production projects particularly attractive and they take off disproportionately in a low-rate environment.

causalpending

Speaker

Larry White

Evidence Quote

the investment projects that are the most interest sensitive are the ones that are really going to take off in the low interest environment and those are the investments... that involve a lot of time between investment being made and the rewards being reaped

Source

Larry White on Hayek and Money 02/01/2010EconTalk
Created: 6/17/2026, 10:31:20 AM

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