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Aggregaete Investment

  • Cabalero, R.J.

The 90s have witnessed a revival in economists' interest and hope of explaining aggregate and microeconomic investment behavior. New theories, better econometric procedures, and more detailed panel data sets are behind this movement. much of the progress has occured at level of microeconomic theories and evidence, however, progress in aggregation and general equilibrium aspects of the investment problem also has been significant. The concept of sunk costs is at the center of modern theories. The implications of these costs for investment go well beyong the neoclassical response to the irreversible-technological friction they represent, for they can also lead to first order inefficiencies when interacting with informational and contractual and co ntractual problems.

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Paper provided by Massachusetts Institute of Technology (MIT), Department of Economics in its series Working papers with number 97-20.

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Length: 58 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:mit:worpap:97-20
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