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The Impact of Supply Bottlenecks on Investment Efficiency

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  • Jan Marek Sztaudynger
  • Jan Jacek Sztaudynger

Abstract

In the paper, the impact of physical capital investments on macroeconomic growth is examined. The authors try to show to what extent it depends on the supply bottleneck (disequilibrium), which existed before the investment and which is eliminated by this investment. The narrower the bottleneck and the more it slows down macroeconomic growth, the more output growth will result from this investment in physical capital. In order to verify this hypothesis, the growth model was modified. Because bottlenecks occur irregularly, GDP fluctuations generated by the model are also irregular (non-cyclical). The authors propose to estimate the macroeconomic bottleneck by the average lagged GDP growth (lags 2 to 6 years). The results of calculations made for Poland’s economy in the years 1997–2019 confirm that economic slowdown preceding investments strengthens their growth effect.

Suggested Citation

  • Jan Marek Sztaudynger & Jan Jacek Sztaudynger, 2022. "The Impact of Supply Bottlenecks on Investment Efficiency," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 1, pages 23-40.
    • Handle: RePEc:aoq:ekonom:y:2022:i:1:p:23-40
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    References listed on IDEAS

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    More about this item

    Keywords

    economic growth; physical capital investment; supply bottleneck; Solow model; endogenous growth model;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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