Economics Department Working Paper Series
Working Paper Number
2021-11
Publication Date
2021
Abstract
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.
DOI
https://doi.org/10.7275/23485220
License
UMass Amherst Open Access Policy
Recommended Citation
Girardi, Daniele, "The Neoclassical Theory of Aggregate Investment and its Criticisms" (2021). Economics Department Working Paper Series. 308.
https://doi.org/10.7275/23485220