Investment in Capital Assets and Economic Performance: The U.S. Chemicals and Primary Metals Industries in Transition

Catherine J. Morrison

NBER Working Paper No. 3828
Issued in September 1991
NBER Program(s):Productivity, Innovation, and Entrepreneurship

The effects of market and technological conditions on the investment and markup behavior of firms, and their resulting impacts on economic performance, are closely interrelated and complex. In this paper determinants of and linkages among these are explored for two industries with very different performance records and development patterns over the past three decades -the chemicals and primary metals industries. The analysis is carried out using a production theory model that permits explicit assessment of the motivations underlying firm decisions, based on BLS data from 1955-86. General capital (K) investments are distinguished from investments in innovative or high tech capital such as office and communications equipment (0) and technical and scientific apparatus (S). Investment behavior and thus capacity utilization are explicitly modeled as responses to adjustment costs for capital assets. This approach facilitates the measurement of technological and behavioral factors underlying investment, input demand and pricing decisions. This in turn allows investment patterns and their determinants across capital assets to be interpreted, and their linkages with productive and financial performance to be identified.

download in pdf format
   (295 K)

download in djvu format
   (215 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3828

Published: Journal of Business & Economic Statistics, Vol. 11, no. 1 (January 1993): 45-60. citation courtesy of

Users who downloaded this paper also downloaded* these:
Morrison w3355 Market Power, Economic Profitability and Productivity Growth Measurement: An Integrated Structural Approach
Morrison w1561 Productivity Measurement with Nonstatic Expectations and Varying Capacity Utilization: An Integrated Approach
Bernheim w2942 How Strong are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities
Dow and Gorton w4858 Noise Trading, Delegated Portfolio Management, and Economic Welfare
Morrison w2941 Markup Behavior in Durable and Nondurable Manufacturing: A production Theory Approach
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us