Investment rates and the aggregate production function

Fernando García-Belenguer, Manuel Santos

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

In this paper we consider a simple version of the neoclassical growth model, and carry out an empirical analysis of the main determinants of aggregate investment across countries. The neoclassical growth model predicts that aggregate investment may be influenced by income growth, the capital income share, the relative price of capital, taxes, and other market distortions. We check these investment patterns for both OECD and non-OECD countries. We also decompose investment data into equipment and structures, and explore major factors affecting their relative prices. These empirical exercises shed light into the shape of the neoclassical production function.

Original languageEnglish (US)
Pages (from-to)150-169
Number of pages20
JournalEuropean Economic Review
Volume63
DOIs
StatePublished - Oct 2013

    Fingerprint

Keywords

  • Aggregate investment
  • Aggregate production function
  • Factor income shares
  • Market distortions
  • Relative price of investment

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this