Investment and Growth in Europe and in the United States in the Nineties
The 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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