Revisiting the classical theory of investment: an empirical assessment from the European Union
In alignment with classical investment theory, this study explores the enduring relationships and causal linkages among total private investment, profit rate, unit labour costs, and demand growth within the European Union throughout the period spanning from 1961 to 2019. The empirical approach adopt...
| Autores: | , |
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| Tipo de documento: | artigo |
| Data de publicação: | 2024 |
| País: | España |
| Recursos: | Universidad Complutense de Madrid (UCM) |
| Repositório: | Docta Complutense |
| Idioma: | inglês |
| OAI Identifier: | oai:docta.ucm.es:20.500.14352/100972 |
| Acesso em linha: | https://hdl.handle.net/20.500.14352/100972 |
| Access Level: | Acceso aberto |
| Palavra-chave: | B12 C33 C52 E10 E22 Investment European Union Heterogeneity Cross-Sectional Dependence Causality Economía 5302 Econometría 5307 Teoría Económica |
| Resumo: | In alignment with classical investment theory, this study explores the enduring relationships and causal linkages among total private investment, profit rate, unit labour costs, and demand growth within the European Union throughout the period spanning from 1961 to 2019. The empirical approach adopted involves the use of advanced econometric techniques designed to address cross-sectional dependence and slope heterogeneity. As a first stage, we examine stationarity and cointegration by employing second-generation panel unit root and cointegration tests. Subsequently, we estimate long-run equations through estimators intended to control for cross-sectional dependence and slope heterogeneity. As a further step, we use the Dumitrescu-Hurlin procedure to examine potential bidirectional causality between the variables and detect whether there exists endogeneity in the data. Finally, we apply the dynamic common correlated effects estimator mean group with instrumental variables to control for the potential presence of endogeneity. The outcomes of the analysis underscore a positive association between private investment and the profit rate, unit labour costs, and demand growth, thus providing robust empirical support for the classical theory of investment. |
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