Search

Existing empirical studies have mainly focused on determinants of average investment levels. Instead, we investigate episodes of accelerated capital stock growth having a duration of eight years or longer. We find that episodes are relatively common, even in low-growth regions, but more so in middle-income and Asian countries. After identifying 175 episodes between 1950 and 2014, we employ probit analysis to explore their characteristics. Turning points in investment tend to be preceded by macroeconomic stability, real exchange rate undervaluation, and net capital outflows (especially portfolio outflows). We also find a negative correlation with the capital to output ratio and per capita GDP, and a positive correlation with a human capital index. Investment surges tend to be associated with changes in the trade balance and, to a (statistically) weaker extent, with structural change. Fil: Libman, Emiliano. Universidad Nacional de San Martín; Argentina. Centro de Estudios de Estado y Sociedad; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina Fil: Montecino, Juan Antonio. Columbia University; Estados Unidos Fil: Razmi, Arslan. University of Massachussets; Estados Unidos

This paper investigates the asset pricing and macroeconomic implications of the ratio of new orders (NO) to shipments (S) of durable goods. NO/S is a measure of investment commitments by firms, and high values of NO/S are associated with a business cycle peak. High NO/S predicts a short-run increase in output, mainly from equipment and inventory investment, but a dramatic long-run decline in fixed investment, inventories, and GDP growth. We find that NO/S proxies for a short-horizon component of risk premia that is not captured by the predictive variables identified in prior work. Higher levels of NO/S forecast lower excess returns on a broad set of assets, including equities, long- and intermediate-term Treasury bonds, and highand low-grade corporate bonds, at horizons from one month to one year. For stocks, and to some extent for bonds, these effects are robust to the inclusion of common return predictors. For all assets, predictability is significant on an out-of-sample basis as well. We also address the term structure of risk premia. To measure longer term investment commitment, we construct a similar ratio based on construction starts and show that it proxies for long term risk premia, predicting stock and bond returns primarily at longer horizons.

This paper examines the influence of foreign factor prices and international corporate taxation on fixed investment in the U.K. manufacturing sector. The evidence suggests that factor prices affect fixed investment in the United Kingdom through their influence on international competitiveness rather than the factor mix decision. There also appears to be a significant effect of tax competitiveness on the rate of investment. Empirical evidence suggests that policy to increase investment be aimed at reducing the average rate rather than the marginal rate of corporation tax. Copyright 1999 by Royal Economic Society.

This paper analyses the impact of public investment on the dynamics of private capital formation in an intertemporal optimising market-clearing framework. The key feature characterising the analysis is that the public good is treated as a durable capital good, subject to congestion. We show how in the presence of congestion the effect of government investment on private capital formation involves a tradeoff between the degree of substitution between private and public capital in production and the degree of congestion. Both lump-sum and distortionary tax financing are considered, with this tradeoff being tightened in the latter case

For fifteen years economic historians have discussed whether the German economy suffered from a ‘crisis before the crisis’ during 1925–29, and if so, why. Apart from wages, the most widely debated issue is Weimar's investment record. The contributions so far have relied on the database of Walther Hoffmann which allows a comparison of Weimar's net investment and net product with the pre-World War I period. In this paper, alternative time series for gross fixed investment and gross national product are compiled for the period 1901–32. These data confirm Weimar's poor overall economic growth. However, it appears that Weimar's aggregate investment ratio was quite ‘normal’, if compared both intertemporally with the late Empire and internationally with other major economies in the 1920s. It is argued that further discussion of Weimar's investment record should focus on the productivity of private and especially of public investment rather than on its aggregate level.

Investment facilities economic growth not only by adding to the capital stock, but also by stimulating final demand. In this paper, a method is presented to estimate investment impacts across the Greek economy. Direct and indirect output, income, and employment effects due to both gross fixed investment and final demand were computed to assess the significance and the contribution of agricultural investment to the Greek economy. The results underline the important role of agricultural investment for generating output in the Greek economy. Moreover, nonagricultural sectors considerably benefit from investment in agriculture mainly due to the particular structure of the Greek economy. Copyright 1990 by Oxford University Press.

For many pairs of complementary products, one good might usefully be called a consumption good, and the other a capital good. A concrete example of such complements is gasoline and automobiles. Because of complementarity, investment in automobiles depends on the price of gas. Since cars bought today will be around for several years, there is a dynamic link between the current price of gas and future demand for gas. OPEC has a strategic incentive to set a low oil price today since a low price promotes investment in big cars and other oil-fueled equipment which, in turn, increases the future profit of the oil industry. Consumer investment in product-specific capital is a feature of the markets for many products, especially if one takes a broad perspective of what this capital decision can be. For instance, continuing the example of the gas market, the decision to reside far from work is analogous to the decision to buy a big car since (1) the decision may be influenced by the current price of gas and (2) the decision affects an individual's future demand for gas. As another example consider the demand for phone service. In response to a low price of phone service, businesses makes capital decisions such as the purchase of computer telemarketing machines and other phone equipment. The businesses may also configure their marketing strategy to use (human) phone contact rather than direct personal contact, and such a strategy involves investment in human capital. These investment decisions all tend to make the future demand for phone service relatively inelastic. This paper presents a model in which there are capital goods, "cars," which can be used for two periods, and a consumption good, "gas," which fuels the cars. Big cars are gas guzzlers; i.e., car size and gas are complements. Consumers select the size of their car on the basis of the current price of gas and their expectations of the future

Recent empirical studies (Schultz [8] and [9]) show that an accumulation of knowledge contributes much more to the growth of per capita income than does an increase in the capital-labour ratio. Major parts of the increase in productivity come from investment in human capital and learning by doing. While the learning-by-doing theory has been well formulated (Arrow [1]), there is no theoretical formulation of the link between productivity change and human investment. The purpose of this paper is to provide such a discussion by incorporating the theory of investment in human capital (Becker [2], Ben-Porath [3]) into a model of economic growth. It is shown that for a simple form of a return-to-labour function the existence of nonHarrod-neutral technical change, when it is the result of investment in human capital, is a source of externality. A general result which relates the form of the return-to-labour function to the form that technical progress must take if externalities are to be avoided is then established.

A measure of the cost of capital is developed that incorporates the dynamic effects of tax changes and tax asymmetries. Estimates of the cost of capital are made using an unbalanced panel of 1987 U.K. quoted companies over the period 1971 to 1984. There is wide cross-sectional variation in the cost of capital. The measure is used in estimating an equation where this cross-sectional variation is found to be a significant determinant of the level of company investment. Copyright 1989 by Royal Economic Society.

List of tables List of figures Foreword Preface Conventions 1. Introduction Terry Barker Part I. The Model as a System: 2. Theory and method Terry Barker and William Peterson 3. The accounting framework and the data Terry Barker and Martin Weale 4. The complete model Terry Barker 5. Estimation William Peterson 6. Computer software for a large econometric model William Peterson Part II. Different Economic Sectors of the Model: 7. Consumers' expenditure Vani Borooah 8. Fixed investment William Peterson 9. Stockbuilding Michael Landesmann 10. Exports and imports Terry Barker 11. Employment William Peterson 12. The demand for energy William Peterson 13. Industrial prices and profits Martin Weale 14. Export and import prices Terry Barker 15. Incomes policy and earnings Tony Lawson 16. Social security benefits and personal income tax Don Sharpe 17. The company sector Andrew Goudie, Geoffrey Meeks and Martin Weale 18. Financial stocks and returns Martin Weale 19. Sterling exchange rate Andrew Snell Appendix List of variables in MDM6 Bibliography Index of authors Index of subjects.

This paper develops a dynamic optimizing model of a firm with quasi-fixed factors subject to adjustment costs. The utilization rates of the quasi-fixed factors are chosen optimally by the firm, and the rates of investment in the quasi-fixed factors are based on the shadow prices of these factors, in the spirit of Tobin's q theory of investment. Capital investment is shown to be negatively related to capital utilization along the path to the steady state; however, in response to unanticipated demand shocks, capital utilization and investment are positively related.

This 1983 book presents a comprehensive account of the cycle of fixed capital investment in the Soviet Union, from strategic decision-taking in the Kremlin down to the level of individual building sites. Dr Dyker places the subject in the context of welfare economics and decision-taking theory, but the book's emphasis is on the detailed empirical analysis of Soviet material. It includes analysis of the Soviet design and construction sectors and the developments in Soviet procedures for assessing investment effectiveness, as well as a unique series of case studies of individual investment projects. In a concluding chapter Dr Dyker assesses overall investment effectiveness in the Soviet Union, and looks at Soviet investment planning and Soviet development strategy.

In this study, the level of income and profit of a sample of firms was correlated with indices of management practices and of environment. The indices were included in a production function and a reduced form equation. Management indices were constructed for areas of management defined as personnel and member relations, retail credit, inventory and wholesale merchandising, and strategic planning and sales management. Environmental indices were constructed for personal characteristics of the manager, competition and the board of directors. The indices made a significant contribution to the explanation of both total income and return on fixed investment. The results suggest that it is feasible to construct measures of management behavior and to associate these measures with firm profitability.