Investment Spending In Australia: Further Study And Interpretation
AbstractRecent work in macro theory suggests that aggregate "demand" policies have direct supply-side effects in the short run, if Robert E. Lucas's standard specification of the nonlinear adjustment costs for capital is generalized. In this paper, the authors estimate an investment equation (involving James Tobin's valuation ratio and Australian data) which nests three hypotheses: Lucas's standard specification of adjustment costs, a simple generalization which permits labor to be involved in the installation of capital, and a model which allows for liquidity constraints. The results support the suggested alternative formulation of the q-theory. Copyright 1990 by The Economic Society of Australia.
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Bibliographic InfoPaper provided by Tasmania - Department of Economics in its series Papers with number 1990-05.
Length: 28 pages
Date of creation: 1990
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF TASMANIA, DEPARTMENT OF ECONOMICS, HOBART TASMANIA 7001 AUSTRALIA.
Phone: +61 3 6226 7672
Fax: +61 3 6226 7587
Web page: http://www.utas.edu.au/economics-finance/
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investments ; estimator ; economic models ; demand;
Other versions of this item:
- Heijdra, Ben J & Scarth, William M, 1990. "Investment Spending in Australia: Further Study and Interpretation," The Economic Record, The Economic Society of Australia, vol. 66(195), pages 295-307, December.
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- Myatt, Anthony & Scarth, William M., 1995. "Can fiscal spending be contractionary when interest rates have supply-side effects?," Journal of Macroeconomics, Elsevier, vol. 17(2), pages 289-301.
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