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Technological Progress and Investment: A Non-Technical Survey

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Abstract

This paper presents a non-technical overview of the recent investment literature with a special emphasis on the connection between technological progress and the investment decision. First of all, we acknowledge that some dramatic advances have been made in the 1990s in understanding and modelling non-convex capital adjustment schemes and irreversibility. Nonetheless, this new literature has not always satisfactorily accounted for the investment-specific (or embodied) nature of technical progress. We argue that the recent technological trends towards more embodiment have had a heavy impact on the way the investment decision is taken and is to be taken. This is turn should imply the reconsideration of many empirical results, and a more careful modelling strategy taking into account the price variables and scrupulously choosing the most appropriate level of (dis)aggregation.

Suggested Citation

  • Raouf Boucekkine & Bruno de Oliveira Cruz, 2015. "Technological Progress and Investment: A Non-Technical Survey," AMSE Working Papers 1519, Aix-Marseille School of Economics, France.
    • Handle: RePEc:aim:wpaimx:1519
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    More about this item

    Keywords

    Investment; Technological progress; Non-convex adjustment; irreversibility; Embodiment.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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