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The Capital Investment Problem With Technological Change
Author(s) -
Ozkan Neslihan
Publication year - 2003
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00343
Subject(s) - investment (military) , economics , premise , technological change , capital (architecture) , return on investment , capital investment , physical capital , return of capital , capital accumulation , fixed investment , industrial organization , microeconomics , monetary economics , capital formation , macroeconomics , market economy , financial capital , investment performance , finance , human capital , production (economics) , linguistics , archaeology , history , philosophy , politics , political science , law
The investment decision of a firm allowing for technological change is investigated. Based on the premise that technological change requires capital investment, a simple Q model of capital investment, which describes the investment behaviour of a perfectly competitive firm, is developed. The model is estimated using US manufacturing sector data over the period 1947–87 and the data provide support for the model.