Risk, the spirit of capitalism and growth: the implications of a preference for capital

Article Abstract:

The effects of a 'preference for capital' on economic growth are analyzed based on a stochastic model. Compared to a non-stochastic model, the stochastic growth model shows the effects of the desire for accumulation in more complicated ways. An increase in the 'spirit of capitalism' decreases the rate of time preference, but it may increase or decrease the degree of risk aversion of the economy. As a result, growth rate may depend on consumers' willingness to substitute over time as well as on the range of capital investments.

Usage, Stochastic analysis, Capital

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Growth and finance: an intertemporal model

Article Abstract:

Intertemporal models are often based on the separation of investment and the firm's financing decisions. Finance variables are usually not included. An intertemporal model of a firm with debt finance is presented based on the theory of imperfect capital markets. Steady-state analysis shows the linkages between investment, finance and debt. The potential presence of cyclical paths is established by the Hopf-Bifurcation analysis.

Evaluation, Finance, Investments, Business enterprises

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Growth with imported capital goods, limited export demand and foreign debt

Article Abstract:

A study was conducted to examine the effects of capital goods importation and export demand elasticities into the neoclassical growth model for long-run growth. The results show that growth rates of per capita consumption depend not only on time preference and rates of interest but also on the terms of trade. Classical growth occurs when creditors adjust debt to the level of the capital stock.

Industrial equipment, Balance of trade

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