Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-28T09:14:51.199Z Has data issue: false hasContentIssue false
  • English
  • Français

Investment demand at the firm level : The case of Spain1

Published online by Cambridge University Press:  17 August 2016

Gonzalo Mato
Gonzalo Mato*
Affiliation:
Universidad Complutense and Fundacion Empresa Publica, Madrid
Get access

Summary

In this paper we estimate an investment demand function derived from a standard adjustment costs framework. We also suppose that the speed of adjustment depends on the capacity of the firms to finance their investment projects with their own generated resources. The model is estimated for a sample of 140 firms and 4 years (1978-81).

Using the consistent within-groups estimator, the main results are : 1) expected output appears as the most important determinant of investment ; 2) profits affect investment in the long-run only through the adjustment cost channel ; 3) relative factor prices are not significant, reflecting a very slow substitution between labour and capital in spanish industry.

Résumé

Résumé

Cet article procède à l’estimation d’une fonction d’investissement dérivée d’un modèle standard de coût d’ajustement. Nous supposons que le rythme d’ajustement dépend de la capacité des firmes à financer leurs projets d’investissement sur leurs ressources propres. Le modèle est estimé sur un échantillon de 140 entreprises et sur une période de quatre années (1978-1981).

Les principaux résultats sont : 1) le volume de demande attendu apparaît comme le déterminant le plus important de l’investissement ; 2) les profits n’affectent l’investissement qu’au travers des coûts d’ajustements ; 3) les prix relatifs des facteurs ne sont pas significatifs, reflétant la lente substitution entre le travail et le capital dans l’industrie espagnole.

Keywords

522212631522212631
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 54 , Issue 3 , 1988 , pp. 325 - 336
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1988 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

1

This paper was developed during my stay at the University of Oxford last academic course. I wish to thank Steve Nickell for his continuous help and guidance and M. Arellano for his useful suggestions. I also benefited from the comments of an anonymous referee. Financial support from the Bank of Spain is gratefully acknowledged.

References

REFERENCES

Artus, P. and Muet, P.A.(1984), Un panorama des développements récents de l’économétrie de l’investissement, Revue économique, 5, pp.791–830.Google Scholar
Burguess, S. and Dolado, J.(1987), Intertemporal rules with variable speed of adjustment : an application to U.K. manufacturing employment, Applied Discussion Paper 32, Institute of Economics and Statistics, Oxford.Google Scholar
Eisner, R.(1978), Factors in Business Investment, Ballinger, Cambridge, Mass.Google Scholar
Hausman, J. (1978), Specification tests in econometrics, Econometrica 43, pp. 1251–1272.Google Scholar
Hayashi, F. (1982), Tobin’s marginal q and average q : a neoclassical interpretation, Econometrica 50, pp. 213–224.Google Scholar
Hsiao, C. (1985), Benefits and limitations of panel data, Econometric Reviews 4, pp.121–74.Google Scholar
Jorgenson, D.W. (1971), Econometric studies of investment behaviour ; a survey, Journal of Economic Literature 9, 1971, pp. 1111–1147.Google Scholar
Mairesse, J. and Dormontu, B. (1985), Labor and investment demand at the firm level, European Economic Review 28, pp. 201–231.Google Scholar
Nickell, S. (1978), The Investment Decisions of Firms, Cambridge Univ. Press.Google Scholar
Nickell, S.(1981), Biases in dynamic models with fixed effects», Econometrica 49, pp. 1399–1416.Google Scholar
Nickell, S. (1985), Error correction, partial adjustment and all that : an expository note, Oxford Bulletin of Economics and Statistics 47, pp. 119–129.Google Scholar
Sebastian, C. and Serven, L. (1986), Excedente, inversion y empleo en la empresa espanola, FEDEA 1.Google Scholar
Wadhwani, S. and Wall, M. (1987), The U.K. capital stock. New estimates of premature scrapping, Oxford Review of Economic Policy 2, pp.44–55.Google Scholar