Archive | Neoclassical Theory

Let us make an in-depth study of the Neo-Classical Theory of Investment. The modern approach to business investment is based on Dale Jorgenson's approach known as the neo-classical theory of investment. Jorgenson's theory provides the micro- foundation of the aggregate investment function. For analytical convenience, we classify an economy's firms into two broad categories, viz., (i) production firms that produce [...]

Let us make in-depth study of the Neoclassical theory of investment in an economy. Introduction: After Keynes, a neoclassical theory of investment has been developed to explain investment behaviour with regard to fixed business investment. This theory is called neoclassical theory of investment behaviour because it is based on the neoclassical theory of optimal capital accumulation which is determined by [...]