Investment and Growth in Europe and in the United States in the Nineties
AbstractThe paper analyses the sharp divergence in the nineties between capital formation in the main euro area countries, on the one hand, and the United States, on the other. We have used data from the OECD's International Sectoral Data Base (ISDB), which includes data comparable across a certain number of industrial countries for the most important manufacturing and service sectors on capital stock, investment and value added. Our econometric estimates of an investment function indicate the presence of structural instability at the beginning of the nineties and, in particular, a break in the coefficient that links the growth of capital stock to value added for both the euro area countries and the Anglo-Saxon countries.This result does not seem to be related either to sectoral characteristics or to non-linearities in the relationship between capital formation and expected demand but is partly attributable, at least for the euro area countries, to the greater demand uncertainty in the nineties compared with the previous period.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 372.
Date of creation: Mar 2000
Date of revision:
Investment; structural break; uncertainty;
Other versions of this item:
- Paola Caselli & Patrizio Pagano & Fabiano Schivardi, 2001. "Investment and Growth in Europe and in the United States in the Nineties," Rivista di Politica Economica, SIPI Spa, vol. 91(8), pages 3-36, October.
- Caselli, P. & Pagano, P. & Schivardi, F., 2000. "Investment and Growth in Europe and in the United States in the Nineties," Papers 372, Banca Italia - Servizio di Studi.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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