Download This PaperOn Aggregate Investment as a Function of the Interest Rate
Universita di Siena Working Paper No. 217
47 Pages Posted: 21 May 2000
Date Written: September 1997
Abstract
The paper argues that the several theories used to support the traditional thesis of a dependence of investment on the interest rate are all unconvincing. The following theories are reviewed: pre-Keynesian, Keynes, array of opportunities, Lerner, Jorgenson, adjustment costs, Tobin's q. It is concluded that the difficulties, which empirical research finds in confirming a significant dependence of aggregate investment on the interest rate, are not surprising: there is simply no convincing theoretical reason why such a dependence should be observed.
JEL Classification: E22
Suggested Citation: Suggested Citation
Petri, Fabio, On Aggregate Investment as a Function of the Interest Rate (September 1997). Universita di Siena Working Paper No. 217, Available at SSRN: https://ssrn.com/abstract=199888 or http://dx.doi.org/10.2139/ssrn.199888
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