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Capital Accumulation and Growth: A New Look at the Empirical Evidence

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  • Bond, Steve

    ()
    (Nuffield College, Oxford)

  • Leblebicioglu, Asli

    ()
    (Boston College)

  • Schiantarelli, Fabio

    ()
    (Boston College)

Abstract

We present evidence that an increase in investment as a share of GDP predicts a higher growth rate of output per worker, not only temporarily, but also in the steady state. These results are found using pooled annual data for a large panel of countries, using pooled data for non-overlapping five-year periods, or allowing for heterogeneity across countries in regression coefficients. They are robust to model specifications and estimation methods. The evidence that investment has a long-run effect on growth rates is consistent with the main implication of certain endogenous growth models, such as the AK model.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1174.

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Length: 51 pages
Date of creation: Jun 2004
Date of revision:
Publication status: published in: Journal of Applied Econometrics, 2010, 5 (7), 1073-1099
Handle: RePEc:iza:izadps:dp1174

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Keywords: capital accumulation; investment; growth;

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