Investment Rate vs. Relative Price of Investment
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 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 ration and output per worker across countries.
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