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Is the U.S. a Spendthrift Nation?

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  • Robert E. Lipsey
  • Irving B. Kravis

Abstract

The belief that the U.S. is a nation of spendthrifts, unwilling to pro- vide for the future, rests on observations of particular narrow definitions of capital formation, on the use of nominal values that ignore inter- national differences in the relative prices of capital goods, and on concentration on the ratio of capital formation to total output rather than on the amount of capita1 formation per capita. By a broad definition of capital formation, the U.S. has been investing a proportion of its gross output in the last decade and a half that is not far below that of other developed countries, even in nominal terms. In world prices, or real terms, U.S. capital formation was a higher proportion of output than in nominal terms. Real gross capital formation per capita in the U.S., even by a narrow definition of capital formation, was above the average for developed countries. By a broad measure of capital formation, few countries surpassed the U.S. in per capita real capital formation.

Suggested Citation

  • Robert E. Lipsey & Irving B. Kravis, 1987. "Is the U.S. a Spendthrift Nation?," NBER Working Papers 2274, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2274
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    1. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    2. 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.
    3. Fumio Hayashi, 1989. "Is Japan's saving rate high?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-9.
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    Cited by:

    1. J. David Richardson, 2006. "Comment on "Measuring International Trade in Services"," NBER Chapters,in: International Trade in Services and Intangibles in the Era of Globalization, pages 71-74 National Bureau of Economic Research, Inc.
    2. David F. Bradford, 1990. "What is National Saving?: Alternative Measures in Historical and International Context," NBER Working Papers 3341, National Bureau of Economic Research, Inc.
    3. David F. Bradford, 1989. "Market Value Vs. Financial Accounting Measures of National Saving," NBER Working Papers 2906, National Bureau of Economic Research, Inc.
    4. Balvers, Ronald J. & H. Bergstrand, Jeffrey, 1997. "Equilibrium real exchange rates: closed-form theoretical solutions and some empirical evidence," Journal of International Money and Finance, Elsevier, vol. 16(3), pages 345-366, June.
    5. William E. Cullison, 1990. "Is saving too low in the United States?," Economic Review, Federal Reserve Bank of Richmond, issue May, pages 20-35.

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