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 utilization. The dynamics of the empirical model is derived without using any “time to build” or “delivery lag” assumptions. Our estimation stresses how important are the expectations about the degree of capacity utilisation in explaining investment.
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Citations
De la Croix, D., & Licandro, O. (1990). Investment Under Demand Uncertainty and Capacity Constraints: An Empirical Application to Belgium (Working Papers Institut des sciences économiques 9010). https://hdl.handle.net/2078.5/281075