Separate U.S. investment demand functions are developed and econometrically tested using 19602000 data for (1) plant and equipment, (2) residential housing, and (3) inventory investment. The models explain 90 percent of the variance in plant and equipment demand, 85 percent of housing demand for and 67 percent of inventory demand. Results are contrasted with a previous study of total investment demand. Findings indicate regression coefficients for a total investment's determinants will not be the sum of the regression coefficients in the separate parts, unless the determinants of each of the parts are exactly the same. For investment, they are not.
suggested citation:
John J. Heim. "Determinants of Demand for Different Types of Investment Goods." Proceedings of the New York State Economics Association. vol. 1, October 2008, p. 3443
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