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Full-Text Articles in Social and Behavioral Sciences
The Investment Decision Of The Post-Keynesian Firm: A Suggested Microfoundation For Minsky's Investment Instability Thesis, James Crotty, Jonathan P. Goldstein
The Investment Decision Of The Post-Keynesian Firm: A Suggested Microfoundation For Minsky's Investment Instability Thesis, James Crotty, Jonathan P. Goldstein
James Crotty
In this paper, Crotty and Goldstein undertake the formulation of a model of enterprise investment decision that can provide a microeconomic foundation for the Keynes-Minsky macromodels developed by Delli Gatti & Gallegati, Jarsulic, Semmler and others. The authors address the difficulties inherent in the formulation of an investmes theory in which the future is unknowable, and investment substantially irreversible. Where Minsky accepts a variation of the Tobin-q theory-in which owners and managers are assumed to be identical economic agents-Crotty and Goldstein look to Keynes' insistence on their qualitative difference. Financial commitments to creditors are certain, while expected profits are not. …
The Impact Of Profitability, Financial Fragility And Competitive Regime Shifts On Investment Demand: Empirical Evidence, James Crotty, Jonathan P. Goldstein
The Impact Of Profitability, Financial Fragility And Competitive Regime Shifts On Investment Demand: Empirical Evidence, James Crotty, Jonathan P. Goldstein
James Crotty
Crotty and Goldstein have developed a hybrid post-Keynesian/ neo-Schumpeterian theory of investment demand. In this micro-founded theory of accumulation, the optimal investment decision depends on the level of expected profitability, the degree of competition, and the degree of financial fragility. Its core assumptions are: i)the future is unknowable in principle, ii) physical capital is ii) illiquid and the accumulation process is substantially irreversible, iii) managers and owners are distinct economic agents with an unresolved principal-agent conflict, and iv) management seeks the long-term growth and financial stability of the firm itself, and guards its decision-making authority against encroachment by stockholders and …