Knowledge that Transforms

Charles S. Sheldon, II, Primary Effects on Employment of Shifts in Demand from Domestic to Foreign Products: Comment, The Review of Economics and Statistics, Vol. 40, No. 1, Part 2. Problems in International Economics (Feb., 1958), pp. 106-108

AS is well known, economic theory indicates that, in general, the interest rate will, ceteris paribus, have a greater effect upon longterm than upon short-term investment.' The purpose of this paper is to present a statistical test of this hypothesis. If this hypothesis is correct, we should expect that during periods when the interest rate fell that longer-term investment would tend to increase more rapidly (or decrease more slowly) than shorter-term investment, and conversely. On the average, investment by producers in construction represents a longer-term investment than investment in producers durables. In turn investment in producers durables is, on the average, of longer-term than investment in inventory. In addition, investment in residential construction is, on the average, of longer term than investment in consumers durables. The investment data for the economy as a whole can be conveniently contained within two fractions:

Wassily W. Leontief, Factor Proportions and the Structure of American Trade: Further Theoretical and Empirical Analysis: Reply, The Review of Economics and Statistics, Vol. 40, No. 1, Part 2. Problems in International Economics (Feb., 1958), pp. 119-122