NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Measuring Real Investment: Trends in the United States and International Comparisons

Milka S. Kirova, Robert S. Lipsey

NBER Working Paper No. 6404
Issued in February 1998
NBER Program(s):   ITI   PR

The standard measures of nominal capital formation show the United States investing a proportion of GDP much lower than those of other developed countries throughout the last 25 years and falling further behind over time. In contrast, measures we have calculated in real terms across countries and over time indicate that US investment ratios have been rising over time and have been coming closer and closer to those of the other countries. A broader measure of capital formation more consonant with economic concepts shows the United States to have been close to the other countries since 1970 and to have been investing an above average share of total output in the most recent period 1990-1994. Real capital formation per capita and per worker, even conventionally defined, has been consistently between 15 and 25 percent higher than in the other countries and broadly defined real capital formation per capita and per worker has been 30 to 60 percent higher.

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Published: The Federal Reserve Bank of St. Louis Review, Vol. 80, no. 1 (January-February 1998): 3-18

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