INVESTMENT IN CAPITAL ASSETS AND ECONOMIC-PERFORMANCE - THE UNITED-STATES CHEMICALS AND PRIMARY-METALS INDUSTRIES IN TRANSITION

The effects of market and technological conditions on the investment and markup behavior of firms, and their resulting impacts on economic performance, are closely interrelated and complex. In this article, determinants of and linkages among these are explored for two industries with very different performance records and development patterns over the past three decades-the chemicals and primary-metals industries. Investment decisions for general capital investments as distinguished from high-tech capital are explicitly modeled as responses to adjustment costs. This allows investment patterns, capacity utilization, and their determinants across capital assets to be examined and their linkages with productive and financial performance to be identified.