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Dynamics of Fixed Capital Productivity and the Macroeconomic Equilibrium

Florin Pavelescu ()

Journal for Economic Forecasting, 2013, issue 2, 145-158

Abstract: This paper shows that dynamics of fixed capital productivity at macroeconomic level is related to changes in the indicators and relationships which are fundamental to the economic stability (index of gross fixed capital formation, consumption-fixed capital accumulation relationship, and external equilibrium). In this context, a model of factorial analysis of the dynamics of fixed capital productivity is proposed. Therefore, the impact of pressure of domestic aggregate demand and external equilibrium on the evolution of fixed capital productivity during a period of time should be emphasized. The respective model is applied to the case of Romania. At the end of the paper, having in view Romania’s experience during two decades (1990-2010), arguments are presented to reinforce the thesis of R. Solow stating that a condition for a long run balanced economic growth is that fixed capital productivity should be constant.

Keywords: relative acceleration of gross fixed capital formation; demand pressure; balanced economic growth; external equilibrium (search for similar items in EconPapers)
JEL-codes: C13 C20 C51 C52 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:rjr:romjef:v::y:2013:i:2:p:145-158