ANTICIPATIONS AND INVESTMENT BEHAVIOR IN U.S. MANUFACTURING, 1947-1960.

The paper is concerned with testing an application of a theory of investment behavior based on the neo-classical theory of optimal capital accumulation. The demand for capital is determined to maximize net worth under the neo-classical conditions of production. With the assumption of a lag in the completion of investment projects, gross investment is a distributed lag function of period-to-period changes in desired capital stock. The investment process is divided into a series of separate stages, the first stage being a change in the demand for capital services, intermediate stages being for letting contracts, and so on, and the final stage the actual investment expenditure. To extend the theory to include anticipated investment expenditures, these are treated as a special kind of intermediate stage. The purposes of the paper are to test hypotheses about the internal structure of the investment process when viewed in this way, and to investigate whether forecasting actual investment expenditures by treating the investment process in this way can improve upon the method used by the OBE-SEC. [ABSTRACT FROM AUTHOR]