Old and New Formulations of the Neoclassical Theory of Aggregate Investment: A Critical Review

Authors

Daniele Girardi, Economics Department, University of Massachusetts AmherstFollow

Working Paper Number

2017-03

Publication Date

2017

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.

DOI

https://doi.org/10.7275/9642030

License

UMass Amherst Open Access Policy

Recommended Citation

Girardi, Daniele, "Old and New Formulations of the Neoclassical Theory of Aggregate Investment: A Critical Review" (2017). Economics Department Working Paper Series. 219.
https://doi.org/10.7275/9642030