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Determinants of Investment Decisions and the Economic Purpose of Materials

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  • Antoine Naboulet

    (IDHE, Cachan)

  • Sébastien Raspiller

    (INSEE)

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    Abstract

    The relative importance of various traditional determinants of investment (demand, profit, financial and technological constraints) remains insufficiently understood. Although over a long period of time demand appears to be the most important determinant, empirical analyses have shown that, in France, business profitability, and financial constraints, have over the last 20 years significantly influenced the level of investment. An approach focussing on individual investment decisions and drawing directly on business perceptions provides another perspective on the determinant hierarchy. On the one hand, the determinants have asymmetrical effects on the various strategic components of material investment: demand perspectives dominate with regard to increasing production capacities whilst technical factors are more influential as concerns rationalising production processes. On the other hand, the real factors remain the principal driving forces of investment whilst the factors linked to funding only appear in a restrictive sense in investment decisions.

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    File URL: http://www.insee.fr/fr/ffc/docs_ffc/ES395-396g.pdf
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    Bibliographic Info

    Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

    Volume (Year): 395-396 (2007)
    Issue (Month): (January)
    Pages: 141-163

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    Handle: RePEc:crs:ecosta:es395-396g

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    Related research

    Keywords: Investment Decision; Expectations; Business Tendency Survey; Panel Data;

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    1. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    2. Eisner, Robert, 1972. "Components of Capital Expenditures: Replacement and Modernization Versus Expansion," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 297-305, August.
    3. Robert Eisner, 1978. "Factors in Business Investment," NBER Books, National Bureau of Economic Research, Inc, number eisn78-1, octubre-d.
    4. Jean-Bernard Chatelain & Andrea Generale & Ignacio Hernando & Ulf von Kalckreuth & Philip Vermeulen, 2001. "Firm Investment and Monetary Policy Transmission in the Euro Area," Banco de Espa�a Working Papers 0119, Banco de Espa�a.
    5. Carruth, Alan & Dickerson, Andrew & Henley, Andrew, 2000. " What Do We Know about Investment under Uncertainty?," Journal of Economic Surveys, Wiley Blackwell, vol. 14(2), pages 119-53, April.
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    7. Mojon, Benoît & Smets, Frank & Vermeulen, Philip, 2001. "Investment and monetary policy in the euro area," Working Paper Series 0078, European Central Bank.
    8. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    9. Robert Eisner, 1978. "Introduction to "Factors in Business Investment"," NBER Chapters, in: Factors in Business Investment, pages 1-16 National Bureau of Economic Research, Inc.
    10. Gilbert Venet & Pierre Morin & Michel Norotte, 1987. "Le comportement d'investissement des entreprises françaises : analyses et problèmes," Économie et Prévision, Programme National Persée, vol. 80(4), pages 5-50.
    11. Feldstein, Martin S & Foot, David K, 1971. "The Other Half of Gross Investment: Replacement and Modernization Expenditures," The Review of Economics and Statistics, MIT Press, vol. 53(1), pages 49-58, February.
    12. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
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