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Working Paper 1997-020A

"Does the United States Invest Too Little?"
by Milka S. Kirova, and 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 25 years and falling further behind over time. In contrast, measures we have calculated in real terms across countries 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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Category > Monetary Policy/Macroeconomics
Research Papers and Publications: JEL Code > C8
Research Papers and Publications: JEL Code > E21
Research Papers and Publications: JEL Code > E22