A Note on Aggregate Investment in Australia

WARWICK J. McKIBBIN; ERIC S. SIEGLOFF

doi:10.1111/j.1475-4932.1988.tb02059.x

A Note on Aggregate Investment in Australia

WARWICK J. McKIBBIN^*, ERIC S. SIEGLOFF

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

13 Citations (Scopus)

Abstract

The purpose of this paper is to explore the relevance of Tobin's ‘q theory’ of investment in explaining aggregate investment in Australia, over the period from December 1966 to December 1986. Using standard capital stock data, the q theory performs poorly. However, the cost of adjustment model implies that the conventional capital stock data need to be revised to allow for these adjustment costs. Once this is done, it is found that the q theory explains a statistically significant (although small) proportion of the movements in aggregate investment The residual behaviour of investment is well explained by an accelerator model.

Original language	English
Pages (from-to)	209-215
Number of pages	7
Journal	Economic Record
Volume	64
Issue number	3
DOIs	https://doi.org/10.1111/j.1475-4932.1988.tb02059.x
Publication status	Published - Sept 1988
Externally published	Yes

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A Note on Aggregate Investment in Australia

Abstract

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