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CBO’s Model for Forecasting Business Investment: Working Paper 2018-09

Mark Lasky

No 54871, Working Papers from Congressional Budget Office

Abstract: CBO models most business investment by using a modified neoclassical specification. That specification is similar to the neoclassical model in that the desired capital stock depends positively on output and negatively on the cost of capital, which includes the price of capital, taxes, and rates of return. The specification differs from the neoclassical model in that the capital stock adjusts more rapidly to changes in output than to changes in the cost of capital. In contrast, CBO models investment in capital used by agriculture and extractive industries as depending

JEL-codes: E22 E27 (search for similar items in EconPapers)
Date: 2018-12-12
New Economics Papers: this item is included in nep-mac
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