A Theory of Investment

descriptionPublicationkeyboard_double_arrow_right Part of book or chapter of book , Other literature type 01 Jan 1974Publisher:Springer Berlin Heidelberg

Authors: Shozaburo Fujino;

doi: 10.1007/978-3-642-48150-5_2

A Theory of Investment

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Abstract

According to the Keynesian theory of Investment, the firm determines the optimal amount of Investment by taking into consideration the marginal efficiency of capital and the rate of Interest. In order words, It asserts that the firm determines Investment so as to equate the demand price to the market price of capital goods.1) This Investment behavior implies that a firm determines its optimal stock of capital by maximizing its present value with respect to its capital stock and labor input.2) That is, the Keynesian theory of Investment is nothing more than the neo-classical theory of firm’s behavior.

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Hitotsubashi University
Japan

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