RT Journal Article
T1 Revisiting the classical theory of investment: an empirical assessment from the European Union
A1 Boundi Chraki, Fahd
A1 Perrotini Hernández, Ignacio
AB In alignment with classical investment theory, this study explores the enduring relationships and causal linkages among total private investment, profit rate, unit labour costs, and demand growth within the European Union throughout the period spanning from 1961 to 2019. The empirical approach adopted involves the use of advanced econometric techniques designed to address cross-sectional dependence and slope heterogeneity. As a first stage, we examine stationarity and cointegration by employing second-generation panel unit root and cointegration tests. Subsequently, we estimate long-run equations through estimators intended to control for cross-sectional dependence and slope heterogeneity. As a further step, we use the Dumitrescu-Hurlin procedure to examine potential bidirectional causality between the variables and detect whether there exists endogeneity in the data. Finally, we apply the dynamic common correlated effects estimator mean group with instrumental variables to control for the potential presence of endogeneity. The outcomes of the analysis underscore a positive association between private investment and the profit rate, unit labour costs, and demand growth, thus providing robust empirical support for the classical theory of investment.
PB Springer Nature
SN 0971-1554
YR 2024
FD 2024
LK https://hdl.handle.net/20.500.14352/100972
UL https://hdl.handle.net/20.500.14352/100972
LA eng
NO Boundi-Chraki, F., Perrotini-Hernández, I. (2024). Revisiting the Classical Theory of Investment: An Empirical Assessment from the European Union. J. Quant. Econ. https://doi.org/10.1007/s40953-024-00385-y
NO Conferencia de Rectores de las Universidades Españolas
NO Consejo Superior de Investigaciones Científicas
DS Docta Complutense
RD 6 abr 2025