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Capital Accumulation and Growth: A New Look at the Empirical Evidence

  • Bond, Steve


    (Nuffield College, Oxford)

  • Asli, Leblebicioglu


    (Boston College)

  • Schiantarelli, Fabio


    (Boston College)

We present evidence that an increase in investment as a share of GDP predicts a higher growth rate of output per worker, not only temporarily, but also in the steady state. These results are found using pooled annual data for a large panel of countries, using pooled data for non-overlapping five-year periods, or allowing for heterogeneity across countries in regression coefficients. They are robust to model specifications and estimation methods. The evidence that investment has a long-run effect on growth rates is consistent with the main implication of certain endogenous growth models, such as the AK model.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1174.

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Length: 51 pages
Date of creation: Jun 2004
Date of revision:
Publication status: published in: Journal of Applied Econometrics, 2010, 5 (7), 1073-1099
Handle: RePEc:iza:izadps:dp1174
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  1. De Long, J. Bradford & Summers, Lawrence H., 1993. "How strongly do developing economies benefit from equipment investment?," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 395-415, December.
  2. Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1, December.
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  8. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
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  18. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
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