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A note on the Bauer-Kornai investment cycle theory

Author

Listed:
  • Heng-fu Zou

    (Public Economics Division, World Bank)

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.

Suggested Citation

  • Heng-fu Zou, 1995. "A note on the Bauer-Kornai investment cycle theory," CEMA Working Papers 97, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:97
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    References listed on IDEAS

    as
    1. Roland, Gerard, 1987. "Investment growth fluctuations in the Soviet Union: An econometric analysis," Journal of Comparative Economics, Elsevier, vol. 11(2), pages 192-206, June.
    2. Zou, Heng-fu, 1991. "Socialist economic growth and political investment cycles," European Journal of Political Economy, Elsevier, vol. 7(2), pages 141-157, July.
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    Cited by:

    1. Junlu Ma & Zeguang Li & Qunyong Wang, 2009. "Financial constraints, agency cost and firm’s investment behavior: Evidence from listed companies of China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(3), pages 384-405, September.

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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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