Capital investment, business behaviour, and the macroeconomy

Baddeley, M

Capital investment, business behaviour, and the macroeconomy

Baddeley, M

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Publisher:: CAMBRIDGE UNIV PRESS
Publication Type:: Journal Article
Citation:: Economic and Labour Relations Review, 2023, 34, (1), pp. 35-50
Issue Date:: 2023-03-02

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Field	Value	Language
dc.contributor.author	Baddeley, M https://orcid.org/0000-0001-7884-0374
dc.date.accessioned	2024-03-13T22:43:34Z
dc.date.available	2024-03-13T22:43:34Z
dc.date.issued	2023-03-02
dc.identifier.citation	Economic and Labour Relations Review, 2023, 34, (1), pp. 35-50
dc.identifier.issn	1035-3046
dc.identifier.issn	1838-2673
dc.identifier.uri	http://hdl.handle.net/10453/176652
dc.description.abstract	GC Harcourt made many fundamental and essential contributions to the development of capital investment theory - most famously via his development of the Cambridge Capital Controversies, exposing conceptual and analytical flaws and contradictions in neoclassical approaches to defining and measuring capital. Relatedly, Harcourt also made essential contributions to our understanding of how accounting rules, used by real-world businesses to guide their investment decision-making, create anomalies and deficiencies in the accumulation of capital at a microeconomic level - with significant, deleterious consequences for the accumulation of capital at a macroeconomic level. In developing Harcourt's contributions, this paper links Harcourt's early insights about accounting rules with subsequent developments in behavioural economic models of business decision-making, thus aligning Harcourt's contributions with insights from behavioural models of investment decision-making. These insights are then combined in showing how the misapplication of investment appraisal criteria at a microeconomic level contributes to under-investment and investment volatility in the macroeconomy, with negative implications for output, employment, labour productivity, wages and cyclical volatility.
dc.language	English
dc.publisher	CAMBRIDGE UNIV PRESS
dc.relation.ispartof	Economic and Labour Relations Review
dc.relation.isbasedon	10.1017/elr.2022.11
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	1402 Applied Economics, 1503 Business and Management, 1605 Policy and Administration
dc.subject.classification	3505 Human resources and industrial relations
dc.subject.classification	3801 Applied economics
dc.subject.classification	4410 Sociology
dc.title	Capital investment, business behaviour, and the macroeconomy
dc.type	Journal Article
utslib.citation.volume	34
utslib.for	1402 Applied Economics
utslib.for	1503 Business and Management
utslib.for	1605 Policy and Administration
pubs.organisational-group	University of Technology Sydney
pubs.organisational-group	University of Technology Sydney/Faculty of Business
pubs.organisational-group	University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	open_access	*
dc.date.updated	2024-03-13T22:43:33Z
pubs.issue	1
pubs.publication-status	Published
pubs.volume	34
utslib.citation.issue	1

Abstract:

GC Harcourt made many fundamental and essential contributions to the development of capital investment theory - most famously via his development of the Cambridge Capital Controversies, exposing conceptual and analytical flaws and contradictions in neoclassical approaches to defining and measuring capital. Relatedly, Harcourt also made essential contributions to our understanding of how accounting rules, used by real-world businesses to guide their investment decision-making, create anomalies and deficiencies in the accumulation of capital at a microeconomic level - with significant, deleterious consequences for the accumulation of capital at a macroeconomic level. In developing Harcourt's contributions, this paper links Harcourt's early insights about accounting rules with subsequent developments in behavioural economic models of business decision-making, thus aligning Harcourt's contributions with insights from behavioural models of investment decision-making. These insights are then combined in showing how the misapplication of investment appraisal criteria at a microeconomic level contributes to under-investment and investment volatility in the macroeconomy, with negative implications for output, employment, labour productivity, wages and cyclical volatility.

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http://hdl.handle.net/10453/176652