Investment, cash flow, and sunk costs

Article Abstract:

The impact of cash flow on investment spending of US manufacturing firms within the context of financial market imperfections and sunk costs was investigated. The issue of market imperfection was correlated with the specificity of assets to be purchased. Investment spending data of 270 manufacturing industries from 1963 to 1989 were analyzed. It was concluded that there was close relationship between cash flow and investment spending, that the impact of cash flow is higher in durable goods than in nondurable goods industries and that the impact of cash flow on investments will be higher in industries with higher sunk costs.

Investments, Capital market, Capital markets, Capital investments, Cash flow

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Innovations, prices and employment: a theoretical model and an empirical application for West German manufacturing firms

Article Abstract:

The theoretical model of the effect of product and process improvements on output, capacity utilization, employment and prices was constructed. A novel set of micro-data from West German manufacturing industries was used to estimate the parameters of the model. Experimental findings showed that innovative companies are more successful because they have a higher utilization and larger output and employment growth than non-innovative companies.

Models, Innovations, Employment, Prices, Technological innovations, West Germany

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