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Investment demand at the firm level : The case of Spain

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  • Gonzalo MATO

    (Universidad Complutenses and Fundacion Empresa Publica)

Abstract

In this paper we estimate an investment demand function derived from a standard adjustment costs framework. We also suppose that the speed of adjustment depends on the capacity of the firms to finance their investment projects with their own generated resources. The model is estimated for a sample of 140 firms and 4 years (1978-81). Using the consistent within-groups estimator, the main results are : 1) expected output appears as the most important determinant of investment ; 2) profits affect investment in the long-run only through the adjustment cost channel ; 3) relative factor prices are not significant, reflecting a very slow substitution between labour and capital in Spanish industry.

Suggested Citation

  • Gonzalo MATO, 1988. "Investment demand at the firm level : The case of Spain," Discussion Papers (REL - Recherches Economiques de Louvain) 1988033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:1988033
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    Cited by:

    1. Rodríguez Brito, Mª G., 2001. "Restricciones financieras en un contexto de asimetrías informativas: indicencias de la estructura financiera en las decisiones de inversión," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 18, pages 209-232, Agosto.

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