Market Adjustment and Investment Determination under Rational Expectations
Bibliographic Data
| ID | 9725374 |
|---|---|
| Authors | Ingemar Hansson (corresponding author) |
| Year | 1986 |
| Volume | 53 |
| Issue | 212 |
| Pages | 505 |
| Publication date | 1986-11-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/2554100 |
| OpenAlex | W2018861805 |
| Language | EN |
| References cited | 4 |
This paper extends traditional comparative statics analysis by providing a theory for the adjustment between stationary states for a competitive industry that faces upward sloping supply curves for durable and nondurable inputs given rational expectations. It is shown that capital adjustment is e specially slow for an industry with long-lived capital, an inelastic supply of investment goods, and a low elasticity of substitution between durable and nondurable inputs. A numerical analysis reveals that it takes 6.4 to 50.5 years to close half of the gap between actual and stationary state capital for depreciation rates of 0.01 to 0.05. Copyright 1986 by The Review of Economic Studies Limited
Econometrics · Economics · Financial economics · Investment (military) · Microeconomics · Monetary economics · Rational expectations · Capital Investment and Risk Analysis · Economic Growth and Productivity · Economic theories and models
| Highly cited | No |
|---|