Capital Goods (capital + goods)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting88%

Selected Abstracts

Capital quality improvement and the sources of economic growth in the euro area

ECONOMIC POLICY, Issue 42 2005
Plutarchos Sakellaris
SUMMARY Capital quality improvement and Euroland growth Sources of growth Europe's growth slowed in the 1990s, reinforcing the overall impression of a need to catch up with the US regarding standards of living. In reaction, EU leaders adopted the famous Lisbon Agenda in 2000. The Agenda is now under review, the aim being to determine why progress on its pro-growth goals has been unsatisfactory and what can be done about it. The first crucial step in this process is to understand the true sources of the European growth slowdown. Sources-of-growth calculations have always been imprecise, but evidence from the US suggests that ,quality upgrading', especially in capital goods , has substantially worsened the precision problem since the 1990s. Unfortunately, quality adjusted sources-of-growth calculations, however, have not performed satisfactorily for Europe, so Europe's leaders are working with potentially misleading accounts of Europe's growth slowdown. Redressing this omission is the goal of this paper. Failure to account properly for capital quality improvements leads to two mistakes. First, overall GDP is underestimated. Our calculations, for example, show that euro area GDP growth was underestimated on average by 0.7 percentage points annually in the late 1990s. However, similar quality-adjustment figures raise US growth figures in the same period by even more, so quality-adjusting suggests that the US,EU growth gap was even more pronounced than previously believed. Secondly, the sources-of-growth calculations used to prioritize Europe's pro-growth policies are skewed. Our calculations show that the contribution of the slowdown in disembodied technical progress to the overall slowdown is more pronounced after quality adjustment. Our findings point to the need for adoption of microeconomic measures aimed at enhancing overall efficiency and boosting innovation activity. Such measures would aim at a better business environment, e.g. by easing regulatory and administrative burden and liberalizing energy and telecommunications markets. , Plutarchos Sakellaris and Focco Vijselaar [source]

Role of Endogenous Vintage Specific Depreciation in the Optimal Behavior of Firms

INTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2008
Cagri Saglam
D92; O33; E22; C61 This paper studies the firms' capital accumulation process in a vintage capital model with embodied technological change. We take into account that depreciation is endogenous and in particular associated with vintage specific maintenance expenditure. We prove that maintenance is a local substitute for investment as soon as the marginal cost of maintenance is strictly increasing. We show that maintenance and investment in new capital goods appear as complements with respect to the changes in productivity, cost of maintenance, fixed cost of operation, efficiency of maintenance services and appear as substitutes with respect to the price of new machines. Allowing for investment in old vintages, we determine that investment in old machines appears as a substitute of both investments in new machines and maintenance services. We end up by analyzing the effects of technological progress on optimal plans and prove that a negative anticipation effect can occur even without any market imperfections. [source]

Environmental Impacts of Products: A Detailed Review of Studies

JOURNAL OF INDUSTRIAL ECOLOGY, Issue 3 2006
Arnold Tukker
Summary Environmental effects of economic activities are ultimately driven by consumption, via impacts of the production, use, and waste management phases of products and services ultimately consumed. Integrated product policy (IPP) addressing the life-cycle impacts of products forms an innovative new generation of environmental policy. Yet this policy requires insight into the final consumption expenditures and related products that have the greatest life-cycle environmental impacts. This review article brings together the conclusions of 11 studies that analyze the life-cycle impacts of total societal consumption and the relative importance of different final consumption categories. This review addresses in general studies that were included in the project Environmental Impacts of Products (EIPRO) of the European Union (EU), which form the basis of this special issue. Unlike most studies done in the past 25 years on similar topics, the studies reviewed here covered a broad set of environmental impacts beyond just energy use or carbon dioxide (CO2) emissions. The studies differed greatly in basic approach (extrapolating LCA data to impacts of consumption categories versus approaches based on environmentally extended input-output (EEIO) tables), geographical region, disaggregation of final demand, data inventory used, and method of impact assessment. Nevertheless, across all studies a limited number of priorities emerged. The three main priorities, housing, transport, and food, are responsible for 70% of the environmental impacts in most categories, although covering only 55% of the final expenditure in the 25 countries that currently make up the EU. At a more detailed level, priorities are car and most probably air travel within transport, meat and dairy within food, and building structures, heating, and (electrical) energy-using products within housing. Expenditures on clothing, communication, health care, and education are considerably less important. Given the very different approaches followed in each of the sources reviewed, this result hence must be regarded as extremely robust. Recommendations are given to harmonize and improve the methodological approaches of such analyses, for instance, with regard to modeling of imports, inclusion of capital goods, and making an explicit distinction between household and government expenditure. [source]

Energy Price Shocks and the Macroeconomy: The Role of Consumer Durables

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 7 2008
RAJEEV DHAWAN
energy prices; business cycles; durable goods We create a model with a distinction between investment in consumer durables and capital goods, as well as energy use by households and firms, to evaluate the importance of energy price shocks for output fluctuations. Simulation results indicate that this economy has a smaller proportion of output fluctuations attributable to energy price shocks than one without durable goods and household energy use. We show that an energy price hike is absorbed by reducing investment in durables more than in fixed capital. This rebalancing effect cushions the hit to future production. Thus, productivity shocks remain the prime driver for output fluctuations. [source]

Simulation and multi-attribute utility modelling of life cycle profit

JOURNAL OF MULTI CRITERIA DECISION ANALYSIS, Issue 4 2001
Tony RosqvistArticle first published online: 16 NOV 200
Abstract Investments on capital goods are assessed with respect to the life cycle profit as well as the economic lifetime of the investment. The outcome of an investment with respect to these economic criteria is generally non-deterministic. An assessment of different investment options thus requires probabilistic modelling to explicitly account for the uncertainties. A process for the assessment of life cycle profit and the evaluation of the adequacy of the assessment is developed. The primary goal of the assessment process is to aid the decision-maker in structuring and quantifying investment decision problems characterized by multiple criteria and uncertainty. The adequacy of the assessment process can be evaluated by probabilistic criteria indicating the degree of uncertainty in the assessment. Bayesian inference is used to re-evaluate the initial assessment, as evidence of the system performance becomes available. Thus authentication of contracts of guarantee is supported. Numerical examples are given to demonstrate features of the described life cycle profit assessment process. Copyright © 2001 John Wiley & Sons, Ltd. [source]

An Extension of the Structural Change Model to International Economic Relations

METROECONOMICA, Issue 4 2003
Ricardo Azevedo Araujo
ABSTRACT In this paper Pasinetti's model of structural economic dynamics (1981) is extended to consider international economic relations. Conditions for full employment, full expenditure of income and equilibrium of the trade balance are established for an open economy that requires capital goods to produce final commodities. Analytical results concerning the benefits from free trade and international learning are formally studied. In addition, static and dynamic aspects of the ,principle of comparative cost advantage' are analysed considering the determinants of the specialization level. [source]

Shifting the goal posts for design management in capital goods projects: ,design for maintainability'

R & D MANAGEMENT, Issue 5 2003
Chris J. Ivory
Two case studies of capital goods projects, both of which were faced with new forms of demand for their products, are reported in this paper. In both cases, the contracting organisations involved were adjusting to new customer requirements for the long-term provision of the services associated with the capital goods they normally produced, rather than for the capital goods themselves. While both contracting organisations recognised the need to re-focus their equipment design efforts, to reflect the need for long-term service reliability (both contracting organisations were tied to penalties associated with agreed service levels), they nevertheless responded differently to this challenge, and their differing responses reflected the differing natures of the extended networks which comprised both projects and the organisational architectures in which the projects were themselves embedded. The paper explores the differing opportunities and barriers to the management of design in complex projects presented by these two case studies. In so doing it points to the conclusion that successful design management in complex projects can depend upon the successful management of the (multiple) contexts in which design takes place. [source]

FOREIGN CAPITAL AND EFFICIENCY IN DEVELOPING COUNTRIES

BULLETIN OF ECONOMIC RESEARCH, Issue 4 2008
Camilla Mastromarco
O47; O57 ABSTRACT This paper uses stochastic frontier methodology to analyse foreign direct investment, imported capital goods and human capital as channels for increased efficiency in less-developed countries. Empirical investigation reveals that developing countries differ with respect to the efficiency with which they use frontier technology. Foreign direct investment and human capital play a significant and quantitatively important role in explaining these differences. [source]

Complementarity, growth, and trade

CANADIAN JOURNAL OF ECONOMICS, Issue 3 2002
Seppo Honkapohja
We consider an endogenous growth model with international trade in complementary capital goods. The model possesses several distinct, balanced growth solutions, which we classify using stability under adaptive learning. Some of the equilibria can involve growth rates much higher than others. We show that, in addition to a small (usually positive) effect on a given equilibrium, an expansion in trade may sometimes yield a much larger, sudden jump in growth. The small effect on the initial equilibrium may reduce growth if the opportunity cost of capital rises very fast as growth accelerates. JEL Classification: F12, F15, O41 Complémentarité, croissance, et commerce international. Les auteurs utilisent un modèle de croissance endogène en présence de commerce international de biens capitaux complémentaires. Le modèle possède plusieurs solutions de croissance équilibrée distinctes que les auteurs classifient en utilisant des mesures de stabilité avec apprentissage adaptatif. Certains de ces équilibres peuvent impliquer des taux de croissance plus élevés que d'autres. Il appert qu'une expansion du commerce international, en plus d'avoir un petit effet (habituellement positif) sur un équilibre donné, peut parfois engendrer une augmentation plus forte et soudaine de la croissance. Le petit effet sur l'équilibre initial peut réduire la croissance si le coût d'opportunité du capital augmente rapidement à proportion que la croissance accélère. [source]