Old and new formulations of the neoclassical theory of aggregate investment: a critical review

Daniele Girardi

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: This paper surveys the neoclassical theory of aggregate investment and its criticisms. We distinguish four main formulations of this theory: the traditional Wicksellian investment function; the Fisherian array-of-opportunities approach (as Witte Jr. called it); the Jorgensonian model; the now prevailing adjustment-costs models. With respect to other papers criticizing the neoclassical theory of investment, we do not appeal to market imperfections. We instead argue that all four formulations present serious theoretical difficulties, even conceding free competition.

Keywords: investment; neoclassical theory; Wicksell; Jorgenson; Fisher; adjustment-costs (search for similar items in EconPapers)
JEL-codes: B13 B22 E22 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-his, nep-hme, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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