NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Comment on Feldstein's Fisher-Schultz Lecture

Ray C. Fair

NBER Working Paper No. 716
Issued in July 1981
NBER Program(s):EFG

Feldstein argues in his Fisher-Schultz Lecture that he has found, by accounting for inflation and taxes, large and significant rate of return effects on investment. His results are interesting because they seem to be robust to alternative specifications of the investment equation. Feldstein has clearly not exhausted all possible specifications of the investment equation, and this comment reports on results, using Feldstein's data, for one alternative specification. The results do not support Feldstein's conclusion. The data do not appear to contain enough information to decide the issue of the quantitative effect of the cost of capital on investment.

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Document Object Identifier (DOI): 10.3386/w0716

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