Business Intelligence

Investment Rates And The Aggregate Production Function

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Executive Summary

In this paper, the authors consider a simple version of the neoclassical growth model, and carry out an empirical analysis of the main determinants of aggregate investment across countries. More specifically, they study the effects on aggregate investment of income growth, capital income shares, the relative price of capital, and various market distortions. This exercise also sheds light into the shape of the neoclassical production function. They check these investment patterns for both OECD and non-OECD countries. They also decompose investment data into equipment and structures, and explore major factors affecting their relative prices.

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