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Article Excerpt
Policy makers have traditionally considered the macroeconomic relations and the variables that can affect the economic objectives that they pursue, such as prices, employment, balance of payments, and economic growth. Recently, microeconomic behavior has also been considered. To complete the analysis, it is necessary to include those variables that define the firm's evolution and activities, and cash flow could be this kind of variable to be included in the analysis. The main objective of this paper is to show the relationship between cash flow and one of the final economic policy targets, economic growth. This paper considers the relationship between cash flow and applied economics, then develops the effects of cash flow on economic growth. (JEL: 040)
Introduction
In applied economic analysis, decision makers have considered the variables that can affect the economic objectives that they pursue, such as prices, employment levels, balance of payments, and economic growth. These studies have been macroeconomic in nature, although in recent years, microeconomic behavior has also been considered. In spite of this new perspective, variables of managerial character are not usually included, so policy makers have no information about the effects that their measures have on the firm's evolution.
Therefore, the design and the derived effects of an anti-cyclical economic policy have been studied without considering their incidence on the evolution and plans of the firms. Generally, they have tried to affect investment decisions through an expansion of demand and interest rate variations.
To complete such analysis, it is necessary to include those variables that define the firm's evolution and activity. If this type of analysis is able to be developed, it is easy to know how to affect such variables and the effects of such variation on the firm's evolution. One...
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