IDEAS home Printed from
   My bibliography  Save this article

Capital costs, industrial mix, and the composition of business investment


  • Yolanda K. Henderson
  • Jeffrey B. Liebman


The composition of business investment in the United States changed dramatically during the 1980s. Workplaces were transformed as a result of investments in information processing equipment such as computers, fax machines, copiers, and sophisticated telephones. Businesses built new office towers and shopping malls, but few industrial facilities. ; This article considers the extent to which changes in the cost of capital can account for these shifts. A number of developments occurred in the 1980s that affected the cost of capital more for some industries and assets than others. It is well known, for example, that computer prices fell sharply. Also, policymakers enacted significant revisions to the tax laws in efforts to alter the allocation of investment. The article concludes that the changes are due in large part to movements in real capital goods prices across industries and across assets.

Suggested Citation

  • Yolanda K. Henderson & Jeffrey B. Liebman, 1992. "Capital costs, industrial mix, and the composition of business investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 67-92.
  • Handle: RePEc:fip:fedbne:y:1992:i:jan:p:67-92

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Rice, Dorothy P, 1989. "Health and Long-term Care for the Aged," American Economic Review, American Economic Association, vol. 79(2), pages 343-348, May.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Michael P. O'Malley, 1996. "Tax exhaustion, firm investment, and leasing; a test of the Q model of investment," Finance and Economics Discussion Series 96-31, Board of Governors of the Federal Reserve System (U.S.).
    2. Stanley C. W. Salvary, 2004. "The Neoclassical Model, Corporate Retained Earnings, And The Regional Flows Of Financial Capital," Urban/Regional 0410007, EconWPA.

    More about this item


    Capital ; Corporations - Finance;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbne:y:1992:i:jan:p:67-92. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.