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Paper Information

Journal:   JOURNAL OF ECONOMIC MODELING RESEARCH   SUMMER 2011 , Volume - , Number 4; Page(s) 123 To 145.
 
Paper: 

THE SPECIFICATION AND ESTIMATION OF INVESTMENT FUNCTION ACCORDING INFINITE HORIZON IN ECONOMY OF IRAN

 
 
Author(s):  KARIMZADEH MOSTAFA*
 
* UNIVERSITY OF FERDOSI
 
Abstract: 

With regard to importance of investment as an engine of economic growth many economists such as Wicksel, Keynse and Harrod believe that investment is the main source of business cycles. Hence this study specifies investment function according to a basic macroeconomic model such as Ramsey model. Application of Ramsey model can help to extend macroeconomics with micro foundations in economy of Iran and prepares new scopes for researchers.
The main idea of this study is specification of investment function according to Ramsey model and its estimation by cointegration technique for period (1990:Q1-2007:Q4).
The result of econometric estimation indicated a long run relationship between investment, capital stock, and shadow price of capital, installation cost of capital, capital price and terms of trade. Results showed that capital stock, shadow price of capital and terms of trade have direct effects and, installation cost of capital and capital price have inverse effect on investment.

 
Keyword(s): INVESTMENT, RAMSEY MODEL, SHADOW PRICE OF CAPITAL, CO INTEGRATION VECTOR
 
References: 
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