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Investment, Markup and Capacity Utilization in Tunisia

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  • Riadh Ben Jelili

    (Arab Planning Institute)

Abstract

Using data from the Tunisian private manufacturing sector, a theory-consistent model of the investment behavior is estimated. In this model, investment is entirely profit-driven where the profit variable is decomposed into three components: the markup rate on variable costs, the capacity utilization rate and the discrepancy between the optimal and the actual capital-labor ratios. These three components can be related to the usual three determinants of investment: profitability, pressure of demand and relative factor costs respectively. The interpretation of coefficients and the formulation are however different. The econometric investigation demonstrates a clear and strong statistical relationship between investment expenditures and these three determinants.

Suggested Citation

  • Riadh Ben Jelili, 2001. "Investment, Markup and Capacity Utilization in Tunisia," Working Papers 0132, Economic Research Forum, revised 10 Nov 2001.
    • Handle: RePEc:erg:wpaper:0132
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    References listed on IDEAS

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    1. Jean-Pascal Bénassy (ed.), 1995. "Macroeconomics And Imperfect Competition," Books, Edward Elgar Publishing, number 530.
    2. Henri SNEESSENS & Bénédicte MAILLARD, 1988. "Investment, Sales Constraints and Profitability in France, 1957-1985," Discussion Papers (REL - Recherches Economiques de Louvain) 1988022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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