IDEAS home Printed from https://ideas.repec.org/a/taf/rseexx/v35y2011i2p113-131.html
   My bibliography  Save this article

Shock-Induced And Trend Investment In Durable Goods

Author

Listed:
  • N A Labia

Abstract

Part I deals with the fundamental problem of combining, as functions of price, the stock demand for a durable good and the flow supply of new units, the rate of increase in stock supply: The analysis deals with investment in an industry where demand is boosted by an unanticipated demand shock. A model is set out in which the criterion for the optimal increase in capital stock is the quantity that maximises capital gain discounted to the time of the investment decision, rather than that of project completion. The model implies simultaneous determination of the desired capital stock and the rate of investment per period. The implications are analysed, particularly in regard to the economic effects of fiscal and monetary policy. The conclusion is that optimal investment is less than that of Tobin’s q model.In Part II the model is based on the assumption of balanced growth in which capital, labour and output grow at the natural rate. The model accepts that capital installation is sporadic and investigates the problem of the optimal quantum of investment and analyses the causal factors involved.

Suggested Citation

  • N A Labia, 2011. "Shock-Induced And Trend Investment In Durable Goods," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 35(2), pages 113-131, August.
    • Handle: RePEc:taf:rseexx:v:35:y:2011:i:2:p:113-131
    DOI: 10.1080/10800379.2011.12097221
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10800379.2011.12097221
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10800379.2011.12097221?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:taf:rseexx:v:35:y:2011:i:2:p:113-131. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rsee .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.