1976 | OriginalPaper | Buchkapitel
Fixed Investment
verfasst von : E. Greenberg
Erschienen in: Topics in Applied Macroeconomics
Verlag: Macmillan Education UK
Enthalten in: Professional Book Archive
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For many years, and especially since the publication of Keynes’s The General Theory, the study of fixed investment has been a central concern of economists. Keynes’s contribution was to focus attention on changes in the level of income. In a simple Keynesian model <math display='block'> <mrow> <mi>Y</mi><mo>=</mo><mi>C</mi><mo>+</mo><mi>I</mi><mtext> </mtext><mi>a</mi><mi>n</mi><mi>d</mi><mtext> </mtext><mi>C</mi><mo>=</mo><mi>a</mi><mo>+</mo><mi>b</mi><mo>+</mo><mi>b</mi><mi>Y</mi></mrow> </math> $$ Y = C + I\quad and\quad C = a + b + bY $$, where Y is income, C is consumption expenditure, I is investment, and a and b are parameters. It is easily established by substituting for C into the first equation that <math display='block'> <mrow> <mi>Y</mi><mo>=</mo><mfrac> <mn>1</mn> <mrow> <mn>1</mn><mo>−</mo><mi>b</mi></mrow> </mfrac> <mo>+</mo><mfrac> <mi>I</mi> <mrow> <mn>1</mn><mo>−</mo><mi>b</mi></mrow> </mfrac> </mrow> </math> $$ Y = \frac{1}{{1 - b}} + \frac{I}{{1 - b}} $$.