A note on the Bauer-Kornai investment cycle theory

Heng-Fu Zou ()

No 97, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: This short paper has formulated the Bauer-Kornai investment cycle theory in a dynamic system of shortage and the investment rate: when the actual investment rate is higher (lower) than the normal one, the shortage intensity tends to intensify (decrease); when the shortage intensity is above (below) the norm, social planners react to lower (raise) the investment rate. This approach of adjustment by norm has been widely applied to empirical work on investment fluctuations in socialist countries, though the rationality of the investment cycles has been ignored by many. Here it has been shown that this cycle model can be explicitly derived from the rational choice of social planners.

JEL-codes: E22 E32 P24 P26 (search for similar items in EconPapers)
Pages: 7 pages
Date: 1995
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Published in China Economic Review, Volume 4, Issue 1, Spring 1993, Pages 75-81

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Journal Article: A note on the Bauer-Kornai investment cycle theory (1993)
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