 The Flow of Profits: Insights from the Ex Ante ApproachAlbert Gailord Hart Chapter 8 in Profits, Deficits and Instability, 1992, pp 139-163 from Palgrave Macmillan Abstract: Abstract At the 1988 meeting of the American Economic Association, Robert Eisner used the first few minutes of his presidential address to urge economists to make expectational dynamics a major focus of attention. In particular, he reminded us that when we introduce as arguments in an investment function such variables as current and past output, sales, or utilisation of capacity, current or past profits, cash flow or measures of liquidity, and current or past interest rates, depreciation rates, and relative rental price or user costs of capital, … our theory tells us that the arguments we generally need are … the expected future values of those variables. Firms should invest if they expect the future demand for output to be high, if they expect the cost of capital to be higher in the future than now, and if they look to higher future profits as a consequence of current investment, but little if at all in response to current or past values of these variables. (Eisner, 1989, pp. 1–2) Keywords: Cash Flow; Investment Plan; Partial Regression Coefficient; Future Profit; Expenditure Plan (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-11786-4_8 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-11786-4_8 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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