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Does the United States invest "too little?"

  • Milka S. Kirova
  • Robert E. Lipsey

The standard measures of nominal capital formation show the United States investing a proportion of GDP much lower than those of other developed countries throughout the last 2 years and falling further behind over time. In contrast, measures we have calculated in real terms across and over time indicate that U.S. investment ratios have been rising over time and have been coming closer and closer to those of the other countries. A broader measure of capital formation, more consonant with economic concepts, shows the United States to have been close to the other countries since 1970 and to have been investing an above average share of total output in the most recent period 1990-1994. Real capital formation per capita and per worker, even conventionally defined, have been consistently between 15 and 25 per cent higher than in the other countries and broadly defined real capital formation per capita and per worker have been 30 to 60 percent higher.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1997-020.

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Date of creation: 1997
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Handle: RePEc:fip:fedlwp:1997-020
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  1. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
  2. Irving B. Kravis & Robert E. Lipsey, 1991. "The International Comparison Program: Current Status and Problems," NBER Chapters, in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 437-468 National Bureau of Economic Research, Inc.
  3. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  4. Sergio T. Rebelo, 1990. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc.
  5. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  6. repec:ucp:bkecon:9780226301532 is not listed on IDEAS
  7. Nonneman, Walter & Vanhoudt, Patrick, 1996. "A Further Augmentation of the Solow Model and the Empirics of Economic Growth for OECD Countries," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 943-53, August.
  8. Fumio Hayashi, 1986. "Why Is Japan's Saving Rate So Apparently High?," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 147-234 National Bureau of Economic Research, Inc.
  9. Horioka, C.Y., 1993. "Is Japan's Household Saving Rate Really High?," ISER Discussion Paper 0308, Institute of Social and Economic Research, Osaka University.
  10. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
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