The Neoclassical Theory of Aggregate Investment and its Criticisms
Daniele Girardi ()
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Daniele Girardi: Department of Economics, University of Massachusetts Amherst (USA)
UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics
This paper surveys the neoclassical theory of aggregate investment and its criticisms. We identify four main strands in neoclassical investment theory: (i) the traditional Wicksellian model; (ii) the Fisherian ‘array-of-opportunities’ approach; (iii) the Jorgensonian model; (iv) the now prevailing adjustment cost models. We summarize each approach, discuss the main conceptual issues, and highlight similarities and differences between them. We also provide a systematic summary and discussion of the main criticisms that have been leveled at each of these models and highlight some unresolved theoretical issues.
Keywords: investment; neoclassical theory; adjustment costs (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-hme, nep-hpe, nep-isf and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ums:papers:2021-11
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