Showing papers on "Capital deepening published in 1986"

Capital utilization and capital accumulation: Theory and evidence

Abstract: A firm may acquire additional capital input by purchasing new capital or by increasing the utilization of its current capital. The margin between capital accumulation and capital utilization is studied in a model of dynamic factor demand where the firm chooses capital, labour and their rates of utilization. A direct measure of capital utilization-the work week of capital-is incorporated into the theory and estimates. The estimates imply that capital stock is costly to adjust while the work week of capital is essentially costless to adjust. The estimated response of the capital stock to changes in its price and in the required rate of return is more rapid than found in other estimates.

International Capital Mobility in Developing Countries vs. Industrial Countries: What do Saving-Investment Correlations Tell Us?

Abstract: The finding of Feldstein and Horioka (1980) that countriesf investment rates are highly correlated with their national saving rates has by now been confirmed by many subsequent studies, even though their inference that international capital mobility nust be low has not been as widely accepted This paper examines the statistical relationship between national saving and investment in a sample that includes not only 14 industrialized countries, but also 50 developing countries The paper addresses some of the econometric critiques that have been aimed at the Feldstein-Horioka work Contrary to what one would expect from consideration of capital mobility, the coefficient appears higher for industrialized countries than for developing countries, and higher after 1973 than before Our interpretation of the saving-investment evidence is that the hypothesis of a high degree of substitutability for claims on physical capital located in different countries is not supported by the data International substitutability for financial capital may be nigh, but this is a separate condition (which is properly tested by looking directly at rates of return) High international substitutability for bonds would imply high international substitutability for physical capital if capital were perfectly substitutable for bonds within each country, but there is no reason for this to hold, any more than there is for all goods to be perfect substitutes

The Role of Capital in U.S. Economic Growth, 1948-1979

Abstract: The purpose of this study is to analyze the interrelationship between capital formation and economic growth in the United States during the years from 1948 to 1979. These remarkable three decades have been dominated by a powerful upward thrust in the level of U.S. economic activity. In 1948 the output of the private domestic economy was 433 billion dollars; by 1979 it had risen to 1.156 trillion. The increase in the level of economic activity from 1948 to 1979 was more than one and one-half times the rise over the whole preceding course of American history.

The Efficiency of Capital Allocation

Abstract: In this paper we present an intertemporal general equilibrium model of the U.S. economy. The purpose of this model is to analyze the efficiency of capital allocation. We have implemented our model econometrically for annual data covering the period 1955-80. The model encompasses the critical features of U.S. tax laws applicable to income from capital. Equilibrium is determined by market clearing conditions for consumption and investment goods and for capital and labor services in each time period. Under perfect foresight, there exists a unique balanced growth equilibrium corresponding to any stationary tax policy. An intertemporal general equilibrium model of the U.S. economy is presented in this paper. The purpose of this model is to analyze the efficiency of capital allocation. The model is kindred in spirit to the model of the Swedish economy developed by Ragnar Bentzel (1978).

Implications of the U.S. Net Capital Inflow

Abstract: The rapidly growing net inflow of capital from abroad, mirroring the extraordinary deterioration of the U.S. export-import balance, has played a major role in equilibrating overall saving and investment in the United States in the face of unprecedentedly large and persistent federal goverriment budget deficits during the 1980s. As a result of this capital inflow, the share of U.S. financial assets held by foreign investors is also growing rapidly. If the inflow continues, the increasing relative importance of foreign investors will in general change the equilibrium price and yield relationships determined in U.S. markets. In particular, because foreign investors, on average, hold far less of their portfolios in long-term debt instruments than do American investors, the increasing share of foreign ownership of U.S. financial assets is likely to raise the expected return premium on long-term debt, and hence to shift the composition of U.S. financial activity away from capital formation. Nevertheless, the foreign capital inflow -- and with it the U.S.export-import balance -- may change in response to a variety of possible influences, including U.S. fiscal and monetary policies. Empirical estimates based on reduced-form equations indicate that a tightening of U.S. fiscal policy would significantly stimulate U.S. capital formation, and would shrink the U.S. capital inflow (that is, improve the U.S. export-import balance) by even more. Analogous estimates indicate that an easing of U.S. money policy would also significantly stimulate capital formation and shrink the capital inflow, but with the relative magnitudes of the two effects approximately reversed.

Measuring the productivity of capital in united states agriculture

Abstract: The agricultural sector has operated in a period of high real interest rates for over half a decade. Some are concerned that this has limited capital availability and stagnated the historic capital for labor substitution occurring in the sector. This study proposes new procedures for estimating the aggregate production function of United States agriculture. Improvements include incorporation of total returns and revised measures of both durable and nondurable capital inputs. Results indicate increasing capital productivity has occurred, but encouraging further capital substitution may not benefit agricultural producers.

`Economic Growth and Factor Substitution: What Happened to the Yugoslav Miracle?': Some Comments

Abstract: In a paper published some years ago Sapir (i980) made three main points about the post-war development of the Yugoslav economy. (i) The growth of manufacturing and industrial output decelerated 'spectacularly' after the I965 economic reform; (ii) this retardation was accompanied by a 'tendency toward capital deepening brought about by high rates of capital accumulation' and slow labour growth; and (iii) the factor responsible for these results was the policy of maximising income per worker adopted by workers after the I965 reform. The object of this note is to comment critically on each of these points, and to suggest that the policy implications derived from them are misleading. (i) Sapir dealt with the period I955-74, taking I965 as the year to divide this into two sub-periods. This choice of years is inappropriate because I974 was a cyclical peak, but Sapir's starting point in I955 was a year when the first post-war investment cycle was near its trough (Bajt, I971) 1 It is, of course, essergtial that any comparisons of growth rates should be based on cyclically comparable periods. If I949 is taken in place of I955, the rate of growth of industrial output is 9-5 %0 per annum for I949-65, and not I2 I %0 per annum as for I955-65. This still shows a slowing down from the first to the second subperiod, but at a rather more modest rate than Sapir's calculations. It should also be noted that Sapir's dividing point in I965 was the peak year of the most violent upswing of the post-war period: a simple arithmetic average of the rate of growth of manufacturing in the three years ending in I965 is I4-2 % per annum, and for the three following years the rate collapsed to 3-8 % per annum. If some allowance is made for this, so as to make the three peak years more nearly comparable, the contrast in growth rates between the first and second periods is still further diminished. As for the capital deepening after I965 my first comment is that it resulted much more from slower growth of labour (see below) than from more rapid growth of capital. As with the apparent growth retardation, faster accumulation after I965 is also a statistical artefact rather than a real trend. As a result of extremely high capital accumulation in the first post-war investment boom in I 947-52 investment soared to 75 %o of industrial value added by I 955 the stock of industrial capital had risen to an extremely high level. Following this upswing, the level of investment tailed off, and did not regain its pre-Ig52 level

import-led innovation

Abstract: the austrian textile industry responded to massive foreign competition which mainly came from other industrialized countries with the introduction of more efficient and advanced production techniques as well as with improving product quality and design. the introduction of technical progress has helped the industry to meet foreign competition successfully. technical advance in the austrian textile industry was dominated by two specific features. it was imported from abroad while own research activities played only a minor role. the import-led growth strategy persued by the austrian textile industry seems to have been economically successful because of the following reasons. first, economic models on international diffusion of technology suggest that the impact of diffusion on the growth-rate of productivity will be the greatest in industries with medium-sized relative technological gaps. accordingly, with an elasticity between .39 and .15 the austrian textile industry was able to achieve a significant part of its productivity-growth by the import of foreign best practice technology, which was of about the same size as the impact of capital deepening. furthermore, econometric stability tests of the estimated relationshipseem to indicate that the productivity gains obtained by the strategy have increased in the 1970s which might be a possible explanation for the shift that has taken place towards importing technical progress instead of producing it at home. second, the import of foreign process innovations has helped the industry to meet international price competition by making improvements in product quality possible thereby lowering the export price elasticity for textile products.;

Constituição e desenvolvimento do capital financeiro na agricultura

Abstract: The purpose of the study is to analyze the theoretical conections between agricultural development and the role played by big capital in it. The investigation identifies the function of the financist in the development process. Outstanding are the interrelationships of that function with enterprise strategies concerned with intersectorial diversification of investments in order to advance capital integration or conglomeration, as a process of centralizing capital in final pursuit of a medium profit rate from de various markets or sectors where it operates. Also integrated in the center of the capital fusion process is the land market, which is submitted to the same logic of diversification and value increase. The comand of property rights over business groups constitutes itself in an important centralized form of administering and defining strategies of diversifying investments. Agriculture assumes in this context a specific character, whether in the form in which its relation with conglomerate capital occurs, or in the manner applied capital flows. Increasing mobilization (centralization) and mobility of capital are characteristics of financial capital and assume peculiar aspects in agriculture due to the specific rotation of capital in that sector. Implications of this style of capitalist development for production, agrarian structure and rural income set new problems for the "agrarian question" in the present.