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Is the U.S. a Spendthrift Nation?


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  • Robert E. Lipsey
  • Irving B. Kravis


The belief that the U.S. is a nation of spendthrifts, unwilling to pro- vide for the future, rests on observations of particular narrow definitions of capital formation, on the use of nominal values that ignore inter- national differences in the relative prices of capital goods, and on concentration on the ratio of capital formation to total output rather than on the amount of capita1 formation per capita. By a broad definition of capital formation, the U.S. has been investing a proportion of its gross output in the last decade and a half that is not far below that of other developed countries, even in nominal terms. In world prices, or real terms, U.S. capital formation was a higher proportion of output than in nominal terms. Real gross capital formation per capita in the U.S., even by a narrow definition of capital formation, was above the average for developed countries. By a broad measure of capital formation, few countries surpassed the U.S. in per capita real capital formation.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2274.

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Date of creation: Jun 1987
Date of revision:
Publication status: published as Chapter 2, "Saving and Capital Formation in the United States and Other Industrial Countries" from Saving and Economic Growth: Is the United States Really Falling Behind?, re. by Kravis and Lipsey. NY: American Council of Life Insurance and The Conference Board, report No. 90.
Handle: RePEc:nbr:nberwo:2274

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  1. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
  2. Fumio Hayashi, 1986. "Why Is Japan's Saving Rate So Apparently High?," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER Macroeconomics Annual 1986, Volume 1, pages 147-234 National Bureau of Economic Research, Inc.
  3. Fumio Hayashi, 1989. "Is Japan's saving rate high?," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-9.
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Cited by:
  1. J. David Richardson, 2006. "Comment on "Measuring International Trade in Services"," NBER Chapters, National Bureau of Economic Research, Inc, in: International Trade in Services and Intangibles in the Era of Globalization, pages 71-74 National Bureau of Economic Research, Inc.
  2. William E. Cullison, 1990. "Is saving too low in the United States?," Economic Review, Federal Reserve Bank of Richmond, Federal Reserve Bank of Richmond, issue May, pages 20-35.
  3. Bradford, D.F., 1989. "Market Value Us. Financial Accounting Measures Of National Saving," Papers, Princeton, Woodrow Wilson School - Discussion Paper 34, Princeton, Woodrow Wilson School - Discussion Paper.
  4. David F. Bradford, 1990. "What is National Saving?: Alternative Measures in Historical and International Context," NBER Working Papers 3341, National Bureau of Economic Research, Inc.
  5. Balvers, Ronald J. & H. Bergstrand, Jeffrey, 1997. "Equilibrium real exchange rates: closed-form theoretical solutions and some empirical evidence," Journal of International Money and Finance, Elsevier, Elsevier, vol. 16(3), pages 345-366, June.


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