Investment Under Demand Uncertainty and Capacity Constraints : An Empirical Application to Belgium
(1990) , 29 pages
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- Abstract
- This paper evaluates the relevance of q theories under stochastic demand and capacity constraints by estimating an investment function for the Belgian economy. Under these theoretical conditions, we find that the investment rate depends on average q and on the expectations about the degree of capacity utilisation. The dynamics of the empirical model is derived without using any " time to build " or " delivery lags " assumptions. Our estimation stresses how important are the expectations about the degree of capacity utilisation in explaining investment.
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De la Croix, D., & Licandro-Goldaracena, O. (1990). Investment Under Demand Uncertainty and Capacity Constraints : An Empirical Application to Belgium (Econ Working Paper 9010). https://hdl.handle.net/2078.5/51066