The New Zealand economy has undergone a good deal of micro-economic and mac
ro-economic reform in pursuit of higher economic growth. Investment is one
of very few variables robustly associated with growth. We develop an eclect
ic model of investment demand and apply it to New Zealand data, concluding
that, since restructuring began in 1984, the variables change in income and
change in the real after-tax interest rate have become positively associat
ed with investment.