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Financing investment under fundamental uncertainty and instability: A heterodox microeconomic view

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  • Jo, Tae-Hee

Abstract

The business enterprise in the real world wrestles with fundamental uncertainty and instability. Key enterprise decisions such as pricing, financing, and investment are thus made strategically rather than optimally. Heterodox economists are, however, divided in the account of business enterprise's financing behavior; macroeconomists put an emphasis on external financing, whereas microeconomists on internal financing. Moreover, they often stop short of establishing a link between the two. Drawing upon the social provisioning perspective, this essay aims at providing a new light on financing focusing on strategic enterprise decision-making mechanisms.

Suggested Citation

  • Jo, Tae-Hee, 2012. "Financing investment under fundamental uncertainty and instability: A heterodox microeconomic view," MPRA Paper 39450, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39450
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    File URL: https://mpra.ub.uni-muenchen.de/39582/1/MPRA_paper_39582.pdf
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    References listed on IDEAS

    as
    1. Lee,Frederic S., 2006. "Post Keynesian Price Theory," Cambridge Books, Cambridge University Press, number 9780521030212, April.
    2. Jordan Melmies, 2010. "New Keynesians versus Post Keynesians on the theory of prices," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 32(3), pages 445-466, April.
    3. Frederic S. Lee, 2002. "Theory creation and the methodological foundation of Post Keynesian economics," Cambridge Journal of Economics, Oxford University Press, vol. 26(6), pages 789-804, November.
    4. Frederic S. Lee, 2011. "Modeling the Economy as a Whole: An Integrative Approach," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(5), pages 1282-1314, November.
    5. Hyman P. Minsky, 1996. "Uncertainty and the Institutional Structure of Capitalist Economies," Economics Working Paper Archive wp_155, Levy Economics Institute.
    6. Lee, Frederic, 2011. "Heterodox microeconomics and the foundation of heterodox macroeconomics," MPRA Paper 30491, University Library of Munich, Germany.
    7. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
    8. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275.
    9. Frederic Lee & Tae-Hee Jo, 2011. "Social Surplus Approach and Heterodox Economics," Journal of Economic Issues, Taylor & Francis Journals, vol. 45(4), pages 857-876.
    10. Hyman P. Minsky, 2004. "Induced Investment and Business Cycles," Books, Edward Elgar Publishing, number 2947 edited by Dimitri B. Papadimitriou.
    11. Drakopoulos, S A, 1994. " Hierarchical Choice in Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 8(2), pages 133-153, June.
    12. Corbett, Jenny & Jenkinson, Tim, 1997. "How Is Investment Financed? A Study of Germany, Japan, the United Kingdom and the United States," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(0), pages 69-93, Supplemen.
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    More about this item

    Keywords

    Business enterprise; pricing; financing; investment; uncertainty; instability; social provisioning process; social surplus; effective demand;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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