Accelerator Principle

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Accelerator Principle

The idea that a small change in consumer behavior can have a large effect on a company's investment. For example, suppose $100 of investment in a bakery produces $100 worth of baked goods. If consumers usually buy $100 of baked goods each year but this increases to $110, the bakery must buy 10% more equipment, baking materials, and so forth, which can increase the amount it invests in its suppliers by more than 10%. The accelerator principle exacerbates advances and declines; it is used in various models of the business cycle. See also: Multiplier.
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Lastly, there is the accelerator effect of expanding growth.
[9] used TEA amounts ranging from 0.02 to 0.15% in their study, and when 0.1% was used, a strong accelerator effect was observed due to the rapid hydration of C3A (false setting).
Hong Kong Managing Partner Keith Brandt was invited by the Union of Beijing Business Services (UBBS) to present "The Accelerator Effect - Looking at the expansion of Beijing Service Sector from the perspective of Professional Service Institutions" at the 21st Beijing-Hong Kong Economic Cooperation Symposium on 29 November 2017.
- Pakistan economy losing 2-3% GDP because of lack of power; increase in power increases GDP and has an accelerator effect
A pioneering work by Bernanke, Gertler, and Gilchrist (1999, hereafter BGG) considers credit contracts between FIs and borrowing entrepreneurs in the nonfinancial sector and shows that entrepreneurial net worth plays an important role in delivering a financial accelerator effect. Endogenous developments in the net worth amplify the macroeconomic effect of exogenous shocks hitting the economy.
Chami and Cosimano find that the financial accelerator effect also works in reverse in the case of a contractionary policy action.
''And it will have an accelerator effect on the rebuilding of Iraq by forcing the fledgling state to set up the appropriate organs of justice,'' it said.
And yes, Baumol argues that innovation breeds innovation because innovation has an accelerator effect on increasing productivity and extending the supply of limited resources.
According to him, while the Federal Government's budget represents less than 10% of aggregate yearly expenditures in the economy, it has a very significant accelerator effect on the financial plans of other tiers of government, and even more importantly, the private sector, which he observed, mostly operates on a January-December financial year.
Perhaps contrary to conventional wisdom, it is not possible to identify a financial accelerator effect in the data either by examining the forecasting power of credit aggregates or, more generally, by studying the lead/lag pattern between credit aggregates and output.
In this case, the estimated coefficient on the user cost of capital (or Q) will be "too small," leading to adjustment costs that are "too large." Such simultaneity increases apparent accelerator effects, because positive shifts of the investment function raise both investment and output.
In the simulation, lower interest rates raise interest-rate sensitive demand components, which are further increased by higher employment and accelerator effects on business investment (Table A1).

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