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

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  • Constantinos Alexiou
  • Joseph G. Nellis

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 investment, 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 significantly conditioned by industrial profit. Moreover, the distribution of profits between industry and finance, in conjunction with policy objectives, appears to be playing an instrumental role in affecting capital accumulation. Key words: Financialization, Income distribution, Investment, Cointegration.JEL: B22, D33, E20.

Suggested Citation

  • Constantinos Alexiou & Joseph G. Nellis, 2016. "Investment Decisions within the Context of Financialization: Cointegration Evidence from the UK Economy," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(1), pages 113-133.
    • Handle: RePEc:voj:journl:v:63:y:2016:i:1:p:113-133:id:20
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    More about this item

    Keywords

    Financialization; Income distribution; Investment; Cointegration;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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