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Estimating a modified nonlinear Hicks model: Evidence from the US economy (1960-2008)

Michaelides, Panayotis G. and Belegri-Roboli, Athena and Arapis, Gerasimos (2010): Estimating a modified nonlinear Hicks model: Evidence from the US economy (1960-2008).

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Abstract

This paper presents a modified nonlinear Hicks model of the cycle and a method for deriving estimators based on Nonlinear Least Squares and other relevant criteria. Hicks thought that fluctuations in investment, caused by nonlinear changes in autonomous investment and the acceleration principle governing induced investment, led to an adjustment process taking place throughout many periods. An empirical application for the US economy (1960-2008) demonstrates the almost ideal performance of the modified model and the proposed method.

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