Working Paper: NBER ID: w2274
Authors: Robert E. Lipsey; Irving B. Kravis
Abstract: The belief that the U.S. is a nation of spendthrifts, unwilling to pro- vide for the future, rests on observations of particular narrow definitions of capital formation, on the use of nominal values that ignore inter- national differences in the relative prices of capital goods, and on concentration on the ratio of capital formation to total output rather than on the amount of capita1 formation per capita. By a broad definition of capital formation, the U.S. has been investing a proportion of its gross output in the last decade and a half that is not far below that of other developed countries, even in nominal terms. In world prices, or real terms, U.S. capital formation was a higher proportion of output than in nominal terms. Real gross capital formation per capita in the U.S., even by a narrow definition of capital formation, was above the average for developed countries. By a broad measure of capital formation, few countries surpassed the U.S. in per capita real capital formation.
Keywords: capital formation; saving rates; US economy; investment behavior
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| US capital formation (E22) | US investment rates (F21) |
| Broad definition of capital formation (E22) | US capital formation rate (E22) |
| Consumer durables and investments in human capital (E22) | US saving rates (E21) |
| Military expenditures (H56) | US saving rate (D14) |
| Nominal values versus real terms (D46) | US capital formation (E22) |
| Historical data analysis (N00) | Stability in investment behavior (G11) |