Aggregate business investment in China and UK

Literature survey shows that the standard neoclassical investment theory is the most relevant one in applied econometrics. Empirical models of business investment in China and UK are built in this research. It is found that the adjustment to any disequilibrium in the long run relationship between investment and output to user cost of capital ratio is well within one-year in China, but the adjustment in UK is very sluggish, which suggests, in terms of investment, both monetary policy of changing interest rate and fiscal policy of tax reform would be very powerful in China but does not in UK.