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Does the United States invest "too little?"

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Author Info

  • Milka S. Kirova
  • Robert E. Lipsey

Abstract

The standard measures of nominal capital formation show the United States investing a proportion of GDP much lower than those of other developed countries throughout the last 2 years and falling further behind over time. In contrast, measures we have calculated in real terms across and over time indicate that U.S. investment ratios have been rising over time and have been coming closer and closer to those of the other countries. A broader measure of capital formation, more consonant with economic concepts, shows the United States to have been close to the other countries since 1970 and to have been investing an above average share of total output in the most recent period 1990-1994. Real capital formation per capita and per worker, even conventionally defined, have been consistently between 15 and 25 per cent higher than in the other countries and broadly defined real capital formation per capita and per worker have been 30 to 60 percent higher.

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Bibliographic Info

Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1997-020.

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Date of creation: 1997
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Handle: RePEc:fip:fedlwp:1997-020

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Related research

Keywords: Capital ; Saving and investment;

References

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  1. Sergio T. Rebelo, 1992. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc.
  2. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  3. Irving B. Kravis & Robert E. Lipsey, 1992. "The International Comparison Program: Current Status and Problems," NBER Working Papers 3304, National Bureau of Economic Research, Inc.
  4. repec:ucp:bkecon:9780226301532 is not listed on IDEAS
  5. Nonneman, Walter & Vanhoudt, Patrick, 1996. "A Further Augmentation of the Solow Model and the Empirics of Economic Growth for OECD Countries," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 943-53, August.
  6. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
  7. Horioka, C.Y., 1993. "Is Japan's Household Saving Rate Really High?," ISER Discussion Paper 0308, Institute of Social and Economic Research, Osaka University.
  8. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  9. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
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Citations

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Cited by:
  1. Milka S. Kirova & Robert S. Lipsey, 1998. "Measuring Real Investment: Trends in the United States and International Comparisons," NBER Working Papers 6404, National Bureau of Economic Research, Inc.
  2. E. Yndgaard & Palle S. Andersen & Marc Klau, 1999. "Higher profits and lower capital prices: is factor allocation optimal?," BIS Working Papers 65, Bank for International Settlements.

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