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Investment Decisions within the Context of Financialization: Cointegration Evidence from the UK Economy

Constantinos Alexiou and Joseph G. Nellis ()
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Joseph G. Nellis: School of Management, Cranfield University, United Kingdom

Panoeconomicus, 2016, vol. 63, issue 1, 113-133

Abstract: Within the context of financialization, this empirical study sheds some light on the distributional aspects of the existing intra-capitalist conflict between financial and industrial capital and its concomitant impact, via invest- ment, on the macroeconomy. In doing so, bounds-test cointegration techniques in conjunction with Granger causality tests provide the econometric framework upon which the respective models are tested. Annual time series were used spanning from 1971 to 2012, for the UK. The empirical evidence is in line with the theoretical exposition insofar as investment decisions by industry are signif- icantly conditioned by industrial profit. Moreover, the distribution of profits be- tween industry and finance, in conjunction with policy objectives, appears to be playing an instrumental role in affecting capital accumulation.

Keywords: Financialization; Income distribution; Investment; Cointegration instrumentalism; Methodological equilibration. (search for similar items in EconPapers)
JEL-codes: B22 D33 E20 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:voj:journl:v:63:y:2016:i:1:p:113-133