Profitability, Capacity, and Uncertainty: A Robust Model of UK Manufacturing Investment
AbstractThis paper uses a model of capital investment that ascribes a theoretical role to profitability and uncertainty in determining the capital-output ratio. Empirical implementation uses quarterly data from UK manufacturing over a thirty-year period, and unique co-integrating relationships are obtained for two asset classes: buildings and plant and machinery. The corresponding dynamic equations are also well specified. Non-nested testing shows that the performance of the estimated investment models ranks similarly to the performance of predictions from direct investment intentions.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 66.
Date of creation: 29 Aug 2002
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- NEP-ALL-2002-07-08 (All new papers)
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