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Investment Rate vs Relative price of Investment

  • 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)

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    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

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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2004-10.pdf
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    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2004010.

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    Date of creation: 01 Apr 2004
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    Handle: RePEc:ctl:louvir:2004010
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    1. Jones, Charles I., 1994. "Economic growth and the relative price of capital," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 359-382, December.
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    12. James A. Schmitz, 1996. "The role played by public enterprises: how much does it differ across countries?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-15.
    13. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1997. "The poverty of nations: a quantitative exploration," Staff Report 204, Federal Reserve Bank of Minneapolis.
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    16. Restuccia, Diego & Urrutia, Carlos, 2001. "Relative prices and investment rates," Journal of Monetary Economics, Elsevier, vol. 47(1), pages 93-121, February.
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