The Flexible Accelerator Model of Investment: An Application to Ugandan Tea- Processing Firms

Edgar E. Twine, Barnabas Kiiza and Bernard Bashaasha

African Journal of Agricultural and Resource Economics, 2015, vol. 10, issue 01, 15

Abstract: The study uses the flexible accelerator model to examine determinants of the level and growth of investment in machinery and equipment for a sample of tea-processing firms in Uganda. Using a dynamic panel data model, we find that, in the long run, the level of investment in machinery and equipment is positively influenced by the accelerator, firm-level liquidity, and a favourable investment climate in the country. Depreciation of the exchange rate negatively affects investment. We conclude that firm-level strategies that increase output and profitability, and a favourable investment policy climate, are imperative to the growth of the tea industry

Keywords: Agricultural Finance; Financial Economics; International Development (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:afjare:200590

DOI: 10.22004/ag.econ.200590

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