

Title |
The investment function revisited
Similar Titles
|
---|---|
Sub Title | Disciplining capital in Korea |
Material Type | Reports |
Author(English) |
Seguino, Stephanie |
Publisher |
University of Vermont |
Date | 1999 |
Pages | 39 |
Subject Country | South Korea(Asia and Pacific) |
Language | English |
File Type | Documents |
Original Format | |
Subject | Economy < Economic System Economy < Direct Investment |
License | ![]() |
Abstract
Post-Keynesian and Marxian macro models assume that wage increases that lower profits have an adverse impact on investment spending. The experience of Korea during the period 1975-1993 contradicts this assumption. This paper reports results obtained from estimating a modified neo-Kaleckian investment function that examines the impact of increases in the wage share on business spending. Results of the Granger tests that assess the direction of causality between wages, investment, and productivity are also given. Tests indicate that lagged values of the wage share of income have a positive impact on investment. There are several explanations for this, most of which stem from restrictions on foreign direct investment, and the government's ability to discipline capital through its control over loanable funds coupled with the use of measurable benchmarks in export sales in return for access to subsidized credit and other "carrots." (The rest omitted)