An empirical analysis of a Keynesian investment theory using Brazilian firm-level panel data

Gregory Falls and Paul Natke

Journal of Post Keynesian Economics, 2007, vol. 29, issue 3, 501-519

Abstract: This study utilizes a Post Keynesian theoretical model of investment behavior and firm-specific data from Brazilian firms to examine the role that sales, sales growth, financing costs, and internal cash flow play in the investment decisions of firms. In a broad sense, our results are similar to earlier studies that have found some inconsistencies in the relationship between either sales or cash flow and firm investment. Our study suggests even a model based on the Keynesian investment theory will not accurately predict firm behavior in chaotic economic and financial conditions. However, it can provide a foundation for such decisions.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:29:y:2007:i:3:p:501-519

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DOI: 10.2753/PKE0160-3477290307

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