Economics Department

Working Papers in Economics

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

AUTHOR(S):
Steve Bond, Oxford University and IFS
Asli Leblebicioglu , Boston College
Fabio Schiantarelli, Boston College

DOCUMENT TYPE: Article

ABSTRACT:
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.