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The Determinants of New Orders of Non-Defence Capital Goods and Its Relationship to Business Fixed Investment Expenditures: 1992 to 2010

Author

Listed:
  • Douglas Mair
  • Evangelos Charos
  • Hossein Kazemi
  • Anthony J. Laramy

Abstract

The determinant of nonfarm nonfinancial corporation orders of nondefense capital goods (as generated by the Census Bureau) is modelled during the period of 1992 to 2010. Statistically significant relationship between investment orders and the cyclical variations in output, the interest rate spread, net cash flows, the net increase in financial liabilities, the net increase in financial assets, and the value of (nondefense) manufacturing shipments is found. During the period 1992 to 2001, the wage share is inversely related to new orders. New orders are used to explain, subject to a lag, nonfarm nonfinancial corporations fixed investment expenditures, as generated by the BEA. A statistically significant relationship is found between investment expenditures and new orders, subject to modifications by changes contemporaneous economic conditions (largely reflected in cyclical changes in output, and, to a lesser extent, changes in the interest rate spread).

Suggested Citation

  • Douglas Mair & Evangelos Charos & Hossein Kazemi & Anthony J. Laramy, 2013. "The Determinants of New Orders of Non-Defence Capital Goods and Its Relationship to Business Fixed Investment Expenditures: 1992 to 2010," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 71-92.
    • Handle: RePEc:ers:journl:v:xvi:y:2013:i:3:p:71-92
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    References listed on IDEAS

    as
    1. Jerry Courvisanos, 1996. "Investment Cycles in Capitalist Economies," Books, Edward Elgar Publishing, number 1013.
    2. Victor Zarnowitz, 1973. "Orders, Production, and Investment: A Cyclical and Structural Analysis," NBER Books, National Bureau of Economic Research, Inc, number zarn73-1, March.
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    More about this item

    Keywords

    New Orders of Investment Goods; Investment Expenditures; Interest Rate Spread; Cash Flow; Sales Accelerator;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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