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Revisiting the accelerator principle in a world of uncertainty: Some empirical evidence

Listed author(s):
  • Arestis, Philip
  • Gonzalez-Martinez, Ana Rosa

This contribution builds on the accelerator model to produce an investment function in which employment and households' investment are used as proxies for economic activity. This analysis identifies a positive correlation between corporate investment in fixed assets and households' investment in dwellings. Using a panel of 11 OECD countries for the period 1970–2010, the results also confirm that oil prices and interest rates may dampen firms' investment in fixed assets. An interesting feature of this investment function is that it accounts for uncertainty.

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File URL: http://www.sciencedirect.com/science/article/pii/S0264999316300633
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 56 (2016)
Issue (Month): C ()
Pages: 35-42

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Handle: RePEc:eee:ecmode:v:56:y:2016:i:c:p:35-42
DOI: 10.1016/j.econmod.2016.03.012
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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