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- Title
A NEW APPROACH TO THE EMPIRICAL INVESTIGATION OF INVESTMENT EXPENDITURES.
- Authors
Anderson, G. J.
- Abstract
It has been possible to formulate some competing theories in such a manner that they may be successfully compared within the confines of a systematic procedure. However, in as much as part of the structure remains to be determined empirically, some of the contending theories may be ruled out in the process of respecification. Respecification or 'Causal Modelling' thus becomes critical to the development of the investment equation and concomitantly the generality of the initial maintained hypothesis is crucial. Having undertaken a specification search and still retaining the general model (i.e. clay--clay and putty--putty specialisations have not emerged) it is nonetheless possible to test the alternatives as nested versions of the general model. This has been done and both were strongly rejected against the general model, confirming its superiority as a representation of the process generating the data. The nominal expenditure representation of the investment expenditure decision provides an alternative to estimating models in real terms. Unfortunately the dominant model is not strictly derived from a putty--clay set up (though it is consistent with the effects that such a set up yields) and could equally well be interpreted as a flexible accelerator model with credit rationing. However it is possible to conclude that the financing variable is relevant in such a model lending support to either a putty--clay or credit rationing formulation.
- Subjects
INVESTMENTS; STOCKHOLDERS equity; CAPITAL stock; ESTIMATION theory; ECONOMIC forecasting; FINANCE
- Publication
Economic Journal, 1981, Vol 91, Issue 361, p88
- ISSN
0013-0133
- Publication type
Article
- DOI
10.2307/2231698