Expansionary investment

In several western countries, public or private institutions collect data on the volume of Fixed Capital Investment (in plant and equipment) and Inventory (in finished or unfinished products) and on the proportions of Expansionary Invest-... 

E(t) volume of expansionary investment at time t R t) volume of rationalizing investment at time t. ... 

A fictitious neutral investor who behaves according to the average long term investment trend will first be considered. His investment project of volume i = 1/2 N is composed of expansionary investment eQ and rationalizing investment ro as follows ... 

Real investors, however, behave differently to the neutral investor There are E type investors who favour the expansionary investment type against the average trend. Their projects of financial volume i are constructed as follows ... 

Evidently b is the surplus of expansionary investment in comparison with the neutral case. 

The relation between the investors configuration index (5.15) and the investment structure index (5.6) characterizing strategic investment now follows unambiguously by combining the postulated equations. The total expansionary investment E (t) and the total rationalizing investment R (t) at time t are given by... 

Thus, both expansionary ( -type) and rationalizing (/ -type) investment can increase the r.o.i. by increasing the profits (S - C). 

The main proposition of this chapter is that there are considerable fluctuations in the volume of expansionary and rationalizing investment as a result of entrepreneurial innovation and imitation activities. The proportional distribution of the shares of E t) and R (t) in I t) shift with time. As these fluctuations take place around long term average paths Eq (t) and Rq (t) of the expansionary and rationalizing investment it is first appropriate to decompose E t) and R ft) into... 

During the late sixties after the neo-liberal incumbant government fell on the issue of a mere 3% inflation rate, the newly formed Grand Coalition in the Federal Republic of Germany resorted to a massive expansionary policy programme. Its effect on the investment structure index is clearly visible as an all-time peak in 1969/1970 ca lled the Schiller Effect after Schiller, the accomplished Keynesian economist, who became both minister of finance and of... 

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