Publication Type

Journal Article

Version

submittedVersion

Publication Date

2-2020

Abstract

Are trends in the price of capital technological in nature? First, we find that trends in the relative price of capital vary significantly across countries. We then show that a multi-industry growth model, calibrated to match differences in economic structure around the world and productivity growth rates across industries, accounts for this variation – mainly due to variation in the composition of capital. The finding indicates that the rate of change in the relative price of capital can be interpreted as investment-specific technical change – the extent to which productivity growth is relatively more rapid in the capital-producing sector. The model also accounts for the empirical dispersion of investment rates, but not of rates of economic growth.

Discipline

Economic Theory

Research Areas

Economic Theory

Publication

Review of Economic Dynamics

Volume

37

First Page

127

Last Page

155

ISSN

1094-2025

Identifier

10.1016/j.red.2020.01.004

Publisher

Elsevier

Additional URL

https://doi.org/10.1016/j.red.2020.01.004

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