A note on the Bauer-Kornai investment cycle theory
This short paper has formulated the Bauer-Kornai investment cycle theory in a dynamic system of shortage and the investment rate: when the actual investment rate is higher (lower) than the normal one, the shortage intensity tends to intensify (decrease); when the shortage intensity is above (below) the norm, social planners react to lower (raise) the investment rate. This approach of adjustment by norm has been widely applied to empirical work on investment fluctuations in socialist countries, though the rationality of the investment cycles has been ignored by many. Here it has been shown that this cycle model can be explicitly derived from the rational choice of social planners.
|Date of creation:||1995|
|Publication status:||Published in China Economic Review, Volume 4, Issue 1, Spring 1993, Pages 75-81|
|Contact details of provider:|| Web page: http://cema.cufe.edu.cn/|
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- Roland, Gerard, 1987. "Investment growth fluctuations in the Soviet Union: An econometric analysis," Journal of Comparative Economics, Elsevier, vol. 11(2), pages 192-206, June.
- Zou, Heng-fu, 1991.
"Socialist economic growth and political investment cycles,"
European Journal of Political Economy,
Elsevier, vol. 7(2), pages 141-157, July.
- Zou, Heng-fu, 1991. "Socialist economic growth and political investment cycles," Policy Research Working Paper Series 615, The World Bank.
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