Determinants of fixed assets investments in Brazil in 2007-2017 from a post-Keynesian approach: an empirical analysis

Abstract

This paper assesses empirically the determinants of private investment in Brazil between 2007 and 2017, from a Post-Keynesian approach, seeking to test whether the private investment of non-financial companies was affected by financialization and financial fragility processes a la Minsky. For this purpose, using the data of publicly traded non-financial companies in the period analyzed, segmented into different sector groups, the investment function is tested by two estimation methods: the Generalized Moments Method (GMM), in which an aggregate analysis and the temporal analysis method through the Autoregressive Model with Distributed Lag (ARDL), in which individual analyzes of each group are carried out. Individual results confirm the hypothesis of a negative relationship between financialization and productive investment; as for financial leverage, the models incorporating all companies with and without Petrobras presented a behavior in which higher levels of financial fragility negatively affect investment.