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The decline in investment shares is not caused by falling relative prices of capital: a note

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  • Leon Podkaminer

    (The Vienna Institute for International Economic Studies
    Bielsko-Biala School of Finance and Law)

Abstract

Secularly declining GDP investment shares are often explained by the widespread fall in the relative price of investment goods. Granger non-causality tests applied to longer-term time series for a large number of industrial countries tend to reject that explanation.

Suggested Citation

  • Leon Podkaminer, 2019. "The decline in investment shares is not caused by falling relative prices of capital: a note," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(2), pages 369-380, May.
    • Handle: RePEc:kap:empiri:v:46:y:2019:i:2:d:10.1007_s10663-018-9401-2
    DOI: 10.1007/s10663-018-9401-2
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    References listed on IDEAS

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    1. Canuto, Otaviano & Nallari, Raj & Griffith, Breda, 2014. "Sluggish Postcrisis Growth: Policies, Secular Stagnation, and Outlook," World Bank - Economic Premise, The World Bank, issue 139, pages 1-10, April.
    2. Robert J. Gordon, 2015. "Secular Stagnation: A Supply-Side View," American Economic Review, American Economic Association, vol. 105(5), pages 54-59, May.
    3. Robert E. Hall, 2017. "The Anatomy of Stagnation in a Modern Economy," Economica, London School of Economics and Political Science, vol. 84(333), pages 1-15, January.
    4. Leon Podkaminer, 2017. "Labour Productivity Growth Slowdown: An Effect of Economic Stagnation Rather than its Cause?," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 67(supplemen), pages 67-77, August.
    5. André Varella Mollick & João Ricardo Faria & Pedro H. Albuquerque & Miguel A. León-Ledesma, 2008. "Can globalisation stop the decline in commodities' terms of trade?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 683-701, September.
    6. Rachel, Lukasz & Smith, Thomas, 2015. "Secular drivers of the global real interest rate," Bank of England working papers 571, Bank of England.
    7. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    8. Gregory Thwaites, 2014. "Why are real interest rates so low? Secular stagnation and the relative price of investment goods," Discussion Papers 1428, Centre for Macroeconomics (CFM).
    9. Pierre-Olivier Gourinchas & Richard Portes & Pau Rabanal, 2016. "Secular Stagnation, Growth, and Real Interest Rates," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(4), pages 575-580, November.
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    Cited by:

    1. Jagjit S. Chadha & Issam Samiri, 2022. "Macroeconomic Perspectives on Productivity," Working Papers 030, The Productivity Institute.

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    More about this item

    Keywords

    Relative prices of capital; Investment shares; Secular stagnation; Granger causality;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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