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

Author

Listed:
  • Caselli, P.
  • Pagano, P.
  • Schivardi, F.

Abstract

The paper analyses the sharp devergence 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 fonction 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.

Suggested Citation

  • Caselli, P. & Pagano, P. & Schivardi, F., 2000. "Investment and Growth in Europe and in the United States in the Nineties," Papers 372, Banca Italia - Servizio di Studi.
    • Handle: RePEc:fth:banita:372
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    Cited by:

    1. António Afonso & Juan Alegre, 2011. "Economic growth and budgetary components: a panel assessment for the EU," Empirical Economics, Springer, vol. 41(3), pages 703-723, December.
    2. Paul Butzen & Catherine Fuss & Philip Vermeulen, 2002. "The impact of uncertainty on investment plans," Working Paper Research 24, National Bank of Belgium.
    3. Ulf von Kalckreuth, 2003. "Exploring the role of uncertainty for corporate investment decisions in Germany," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(II), pages 173-206, June.
    4. Luigi Bonatti, 2004. "Fiscal transfers and distributive conflict in a simple endogenous growth model with unemployment," Working Papers (-2012) 0401, University of Bergamo, Department of Economics.
    5. Paola Caselli & Patrizio Pagano & Fabiano Schivardi, 2003. "Uncertainty and the slowdown of capital accumulation in Europe," Applied Economics, Taylor & Francis Journals, vol. 35(1), pages 79-89.

    More about this item

    Keywords

    CAPITAL ; INVESTMENTS ; GROWTH RATE;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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