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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)

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

Suggested Citation

  • Fernando, DEL RIO, 2004. "Investment Rate vs Relative price of Investment," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2004010
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2004-10.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

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

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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