Abstract
At the 1988 meeting of the American Economic Association, Robert Eisner used the first few minutes of his presidential address to urge economists to make expectational dynamics a major focus of attention. In particular, he reminded us that when we
introduce as arguments in an investment function such variables as current and past output, sales, or utilisation of capacity, current or past profits, cash flow or measures of liquidity, and current or past interest rates, depreciation rates, and relative rental price or user costs of capital, … our theory tells us that the arguments we generally need are … the expected future values of those variables. Firms should invest if they expect the future demand for output to be high, if they expect the cost of capital to be higher in the future than now, and if they look to higher future profits as a consequence of current investment, but little if at all in response to current or past values of these variables. (Eisner, 1989, pp. 1–2)
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Eisner, Robert, Factors in Business Investment (Cambridge, Mass.: Ballinger Publishing Company for the National Bureau of Economic Research, 1978).
Eisner, Robert, ‘Divergences of Measurement and Theory and Some Implications for Economic Policy’, American Economic Review, vol. 79 (March 1989) pp. 1–13.
Eliasson, Gunnar, Business Economic Planning (New York: John Wiley & Sons, 1976).
Hart, Albert G., Debts and Recovery, 19291–1937 (New York: Twentieth Century Fund, 1938).
Modigliani, Franco, ‘Introduction to Albert Gailord Hart’, in Franco Modigliani and Guy C. Orcutt (eds), Quality and Economic Significance of Anticipations Data (Princeton: Princeton University Press, 1960).
Copyright information
© 1992 Dimitri B. Papadimitriou
About this chapter
Cite this chapter
Hart, A.G. (1992). The Flow of Profits: Insights from the Ex Ante Approach. In: Profits, Deficits and Instability. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11786-4_8
Download citation
DOI: https://doi.org/10.1007/978-1-349-11786-4_8
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-11788-8
Online ISBN: 978-1-349-11786-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)