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Investment Rate vs Relative price of Investment

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  • Fernando, DEL RIO

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Universidade de Santiago de Compostela, Facultade de CC. Economicas e Empresariais, Departamento de Fundamentos da Analise Economica)

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    Abstract

    In this paper I accomplish a levels account exercise across countries in order to calculate contributions from differences in the relative price of investment and the investment rate to differences in the physical capital-output ratio -and consequently in output per worker- across countries. I find that differences in the relative price of investment account for most differences in the physical capital-output ratio across countries and, consequently, if capital share on income is broadly consistent with national income accounts data, they have a moderate importance in accounting for differences in output per worker. However, differences in the investment rate account for very little disparity in physical capital-output ratio and output per worker across countries

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    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2004010.

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    Date of creation: 01 Apr 2004
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    Handle: RePEc:ctl:louvir:2004010

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    Keywords: Physical capital-output ratio; Output per worker; Investment rate; Relative price of investment;

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