Investment rates and the aggregate production function |
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Institution: | 1. School of Information and Control Engineering, China University of Mining and Technology, Xuzhou 221116, China;2. School of Information Science and Technology, Qingdao University of Science and Technology, Qingdao 266061, China |
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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. |
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Keywords: | Aggregate investment Aggregate production function Relative price of investment Factor income shares Market distortions |
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