Capital costs, industrial mix, and the composition of business investment

Yolanda K. Henderson and Jeffrey Liebman ()

New England Economic Review, 1992, issue Jan, 67-92

Abstract: The composition of business investment in the United States changed dramatically during the 1980s. Workplaces were transformed as a result of investments in information processing equipment such as computers, fax machines, copiers, and sophisticated telephones. Businesses built new office towers and shopping malls, but few industrial facilities. ; This article considers the extent to which changes in the cost of capital can account for these shifts. A number of developments occurred in the 1980s that affected the cost of capital more for some industries and assets than others. It is well known, for example, that computer prices fell sharply. Also, policymakers enacted significant revisions to the tax laws in efforts to alter the allocation of investment. The article concludes that the changes are due in large part to movements in real capital goods prices across industries and across assets.

Keywords: Capital; Corporations - Finance (search for similar items in EconPapers)
Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.bostonfed.org/economic/neer/neer1992/neer192d.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbne:y:1992:i:jan:p:67-92

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in New England Economic Review from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio ().