The Neoclassical Theory of Investment

Dale W. Jorgenson contributed to the development and understanding on the neoclassical investment theory. In the following post I will try to outline and discuss the neoclassical investment theory in simply words. At its heart, Jorgenson’s investment model bases on the idea that there exists an optimal capital stock.  Economic actors, such as firms, invest and disinvest in order to reach the optimal capital stock. Continue reading The Neoclassical Theory of Investment