search query: @author Urga, G. / total: 5
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| Author: | Driver, C. Temple, P. Urga, G. |
| Title: | Profitability, capacity, and uncertainty: a model of UK manufacturing investment |
| Journal: | Oxford Economic Papers
2005 : JAN, VOL. 57:1, p. 120-141 |
| Index terms: | Profitability Capacity Investments Manufacturing United Kingdom Models |
| Language: | eng |
| Abstract: | This paper develops and tests a new theory based on Edmond Malinvaud, in which investment (henceforth as: inv./invs.) under uncertainty is adjusted to balance the cost of excess and deficient capacity (here as: cap). Using quarterly U.K. manufacturing data on two capital assets (i.e. machinery and building) over a 30-year period, unique cointegrating relationships are obtained for the model, linking inv., profitability and cap. utilization. Testing shows that the estimated model performs similarly to a frequently used survey of inv. intentions. Also, differences are addressed in the behaviour of the two asset classes. It is shown that building inv. fell relative to machinery inv. over the period, reflecting not only relative prices and profitability, but also long term influences such as technology or governance. At the macro level, there is little role found for any effects from taxation or financial constraints. |
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