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Title: An econometric study on the investment behaviour of the Greek manufacturing sector.
Author: Xenaki, Athanassia Th.
ISNI:       0000 0001 3573 693X
Awarding Body: University of Sussex
Current Institution: University of Sussex
Date of Award: 1998
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In this thesis, the results are presented of an econometric study, which applies several quarterly and annual Greek macroeconomic time series on four of the best known models of investment: the Neoclassical Stock Adjustment; the Real Net Rate of Return; the Return Over Cost and the Cost of Adjustment-Tobin's q models. Although in various studies these models are heavily criticised, the empirical results of this study show that each of them provides a certain contribution to the identification of the determinants of investment spending. However, none of the individual models appears to explain the investment function entirely. The major reasons for this deficiency are found in the shortcomings of the theoretical models themselves, in the volatile nature of the investment function, and last but not least in the inconstant quality, incompatibility and limitations of the available data. The study's results determine the price variables as very significant factors for the decision of a firm whether or not to invest. They include: • the user cost of capital, mainly through the interest rate components: the long term lending rate and the real interest rate, • the rate of return on capital, • the difference between prospective and actual costs of funds, • the ratio of a firm's market value to the replacement cost of its assets. Another interesting finding of the present study is that the output produced affects the fixed capital formation according to the role that the applied theoretical model attributes to it: • when it represents demand forces in the product market in the neoclassical model, influences investment with high long-run and short-run elasticities, while conditionally to seasonality in the short-run, • when it expresses the level of capacity utilization in the net rate of return and the return over cost models, affects investment significantly but with a low elasticity, • when it shows the firm's power in its product market in Tobin's q model, has a marginal impact on the investment rate. Finally, it is found that investment expenditure is positively affected by the availability of the firm's internally generated funds; when external funds are required, firms are highly dependent on borrowing facilities offered by the banking system.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Economics & economic theory