Chapter

Investment Behaviour of US Corporations

Rohit

in It's Not Over

Published in print January 2013 | ISBN: 9780198088417
Published online January 2013 | e-ISBN: 9780199082292 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198088417.003.0009
Investment Behaviour of US Corporations

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An important component of Steindl’s theory of stagnation was the concept of underinvestment. He argued that with an increase in the degree of monopoly (as a result of business concentration) there is a decline in firm’s investment demand as the erstwhile competitive need to build excess capacity goes down. Chapter 9 tests the investment function and the GDP growth rate to find empirical evidence of this argument. This exercise is performed on firm level data of the manufacturing industries as well as other non-financial industries available from the Compustat Database, which contains an exhaustive firm-level data. The exercise establishes that there was a downward structural break in the real investment behaviour of these firms post early 1980s.

Keywords: investment function; US corporations; non-financial corporations; financial corporations; compustat database; SIC; NAICS; firm-level data

Chapter.  4195 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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