A comparison of behavioral and conventional conceptions of investment
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Capital investment is a fundamental concern of economic theory. Yet, in spite of the enormous literature on the determinants of capital investment and the vigorous economic policies directed at influencing the size and composition of capital investment, researchers have been unable to demonstrate that the more advanced theories are superior to the traditional sales-based and sales-and-income-based flexible accelerators (see Jorgenson and Siebert, 1986a; Bischoff 1971b; Elliot, 1973;Clark, 1979; and Wisley and Johnson, 1985 for comparisons of alternative models of capital investment). In sharp contrast to Jorgenson and Siebert's view almost two decades ago that the determinants of capital investment are well understood and the area only needed refinement [1968a, p. 710], recent papers continue basic disagreements over the proper specification of investment models (see for instance (I) the exchange between Chirinko and Eisner, 1983 and Sinai and Eckstein, 1983, and (ii) Feldstein, 1982, who, despairing of obtaining the "correct" model, estimates a number of models hoping to find some conclusions that are not sensitive to model specification]. Mairesse and Dormont [1985, p.222] report, "there are stills doubts and debates among economists about the real importance of factor price elasticities," factor price elasticities being a central feature of neoclassical investment models. In short, a generally satisfactory model of capital has not been found.
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