The Impact of Supply Bottlenecks on Investment Efficiency

Jan Sztaudynger and Jan Sztaudynger

Ekonomista, 2022, issue 1, 23-40

Abstract: In the paper, the impact of physical capital investments on macroeconomic growth is examined. The authors try to show to what extent it depends on the supply bottleneck (disequilibrium), which existed before the investment and which is eliminated by this investment. The narrower the bottleneck and the more it slows down macroeconomic growth, the more output growth will result from this investment in physical capital. In order to verify this hypothesis, the growth model was modified. Because bottlenecks occur irregularly, GDP fluctuations generated by the model are also irregular (non-cyclical). The authors propose to estimate the macroeconomic bottleneck by the average lagged GDP growth (lags 2 to 6 years). The results of calculations made for Poland’s economy in the years 1997–2019 confirm that economic slowdown preceding investments strengthens their growth effect.

Keywords: economic growth; physical capital investment; supply bottleneck; Solow model; endogenous growth model (search for similar items in EconPapers)
JEL-codes: C20 E13 E20 E22 F43 O40 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:aoq:ekonom:y:2022:i:1:p:23-40

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