VIH MULTIPLE PURPOSE RIVER DEVELOPMENT 



Interdependence and Indivisibility in Production of 



Water Derivatives 53 



Flood Control 54 



Irrigation 56 



Inland Water Navigation 60 



Hydroelectric Power 61 



Multiple Purposes: Complementary Production, 



Substitutability, and Common Costs 68 



Social Marginal Productivity Criterion and Benefit- 

 Cost Analysis 71 



Evaluation of Benefits 73 



Estimation of Costs 75 



IV. THE SOCIAL COST OF FEDERAL FINANCING 78 



Saving and Investment in the United States 80 



Interest Rates in the American Economy 83 



Measuring the Social Cost of Public Capital: 



The Method of this Study 84 



Model A: A Tax Cut Stimulating Consumption 92 



Increasing the Exemption of the Personal Income 



Tax 93 



Reducing Selected Excise Taxes 99 



Model B: A Tax Cut Stimulating Investment 101 



Reducing Personal Income Tax Liabilities 



Proportionately 102 



Reducing the Corporation Income Tax 



Proportionately 110 



Interpretation of Our Results 117 



Accuracy and Limitations 117 



An Alternative: A Tighter Monetary Policy 120 



An Alternative: Separating Risk-Bearing from Pure 



Interest 122 



A Final Comment 125 



NOTE TO CHAPTER IV 127 



PART II. APPLYING THE ANALYSIS: 

 SELECTED CASE STUDIES 



INTRODUCTION 133 



