Patrick Artus; Pierre-Alain Muet's Investment and factor demand PDF

By Patrick Artus; Pierre-Alain Muet

ISBN-10: 0444881050

ISBN-13: 9780444881052

The 1st a part of the ebook provides the estimation of conventional versions of funding, their interpretation within the mild of the disequilibrium concept and their use in comparing the commercial regulations carried out through the seventies. the problem of the easiest illustration of the creation know-how is additionally addressed. the second one half analyses the interdependance of the selections of funding, employment and intake of uncooked fabrics utilizing simultaneous estimations of issue call for equations, in addition to the dynamic adjustment bills corporations are dealing with. The final part illustrates the newest theories and econometric tools: funding versions with numerous regimes considering revenues, employment and financing constraints, and the advent of the uncertainty on destiny sales.

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The 1st a part of the booklet provides the estimation of conventional versions of funding, their interpretation within the mild of the disequilibrium conception and their use in comparing the commercial regulations carried out throughout the seventies. the problem of the simplest illustration of the creation know-how can also be addressed.

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For the econometric estimate, we shall use the simplest formulation of the profit model, linking the investment rate to the non-distributed profit rate, that is, the ratio of retained earnings to gross capital at replacement cost : 54 Investment and Factor Demand I (9) κ / =φ(ί)π+α π Aut Ι =^κ c. A general model Our earlier analysis yielded two conflicting determinations of investment: - the effective-demand model, which, in the general form (7) 0 0 ^ Φ , σ . ΜοΜ+α incorporates the flexible accelerator (2 = 0); - the profit model (9) r =0(L)n +d whose theoretical basis we have just outlined.

As a result, we are led in practice to equate this expectation process with the optimal forecast of a value based on available information (rational expectations in the broad sense). For lack of direct knowledge of agent information, we can choose between two solutions. The first is to assume that agents base their expectations about that value on past observations alone. The expectation then becomes the optimal autoregressive representation of the expected value. If the value grows in the long run at a constant rate, the autoregressive representation must integrate the trend or apply to the growth rate.

Ofc* + b Iw* HE σ-1 _σ- 1 Our first comment is that, insofar as the level of capital demand is fixed by the demand constraint Q* , no returns-to-scale hypotheses are required to obtain a maximum profit — unlike the notional-demand model, which supposes diminishing returns to scale. Secondly, capital elasticity with respect to output (demand) is equal to the inverse of returns to scale (1/(α+β) or 1/v ). It is therefore usually rather close to unity, and somewhat smaller if as production-function estimates show — returns to scale are increasing.

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Investment and factor demand by Patrick Artus; Pierre-Alain Muet


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