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A comment on adjustment costs accelerator and the flexible

Published online by Cambridge University Press:  17 August 2016

R.W. Latham  and
D.A. Peel
R.W. Latham
Affiliation:
University of Liverpool
D.A. Peel
Affiliation:
University of Liverpool
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Extract

Recent work in the theory of the demand for investment has been characterized by the introduction of adjustment costs. An interesting feature of this analysis is that the flexible accelerator turns out to be a special case of the adjustment cost model when the wage rate, the price of output, and the discount rate remain constant over time. No doubt this has been the source of some comfort for empirical workers in spite of its unrealism.

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 39 , Issue 3 , September 1973 , pp. 371 - 376
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1973 

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References

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