An empirical analysis of a Keynesian investment theory using Brazilian firm-level panel data

Gregory A. Falls, Paul A. Natke

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This study utilizes a Post Keynesian theoretical model of investment behavior and firm-specific data from Brazilian firms to examine the role that sales, sales growth, financing costs, and internal cash flow play in the investment decisions of firms. In a broad sense, our results are similar to earlier studies that have found some inconsistencies in the relationship between either sales or cash flow and firm investment. Our study suggests even a model based on the Keynesian investment theory will not accurately predict firm behavior in chaotic economic and financial conditions. However, it can provide a foundation for such decisions.

Original languageEnglish
Pages (from-to)501-519
Number of pages19
JournalJournal of Post Keynesian Economics
Volume29
Issue number3
DOIs
StatePublished - Mar 2007

Keywords

  • Brazilian manufacturing
  • Cash flow
  • Financing constraints
  • Firm investment

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