Determinants of Investment and Policy Implications – With a Comparative Study of Investment Functions in the LINK Models

Abstract

This paper is intended to study the following questions: What are the important determinants of investment? How would these determinants affect investment? What are the policy implications for government to have impact on investment? What are the major different issues on investment between developed economies and developing economies? What are the gaps between the investment theories and the empirical evidences? After a literature view, the paper makes a comparative study of several econometric models from the LINK system, in terms of specification of investment and the impact of policies on investment.