Macro-Economic Implications of Profit Optimizing Investment Behaviour

摘要

The article investigates the macro-economic consequences of profit optimizing investment behavior. First of all, it shows, that, whereas with a profit maximizing investment behavio the economy will as a rule reach a new long run equilibrium after an impulse, with a profit optimizing investment behavior, this need not be the case. More importantly, it will demonstrate that the profit optimizing investment behavior, implies a negative impact of the existence of business cycles on the average capital stock. As a consequence, a government policy invoking or aggravating business cycles as such implies a negative supply shock, with negative effects on production and employment and a positive impact on inflation. The negative effects of the supply shock also spread out to other coutries. As a consequence, the possibility cannot be ruled out, that, although exchange rates are fixed, a positive demand impulse in one country will on balance have negative effects on the outside world. In that case, even in a demand oriented model, a demand policy is internationally conflicting.