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MEASURING REAL INVESTMENT: TRENDS IN THE UNITED STATES AND INTERNATIONAL COMPARISONS Milka S. Kirova Robert E. Lipsey Working Paper 6404 NBER WORKING PAPER SERIES MEASURING REAL INVESTMENT: TRENDS IN THE UNITED STATES AND INTERNATIONAL COMPARISONS Milka S. Kirova Robert E. Lipsey Working Paper 6404 http://www.nber.org/papers/w6404 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 February 1998 The authors thank Bill Dewald for valuable discussions during the work on this article. We also thank Patricia Pollard and Peter Yoo for helpful comments, and Charles Horioka for providing the data on consumer durables in Japan. Eran Segev and Ewa Wojas provided research assistance. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research. © 1998 by Milka S. Kirova and Robert E. Lipsey. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Measuring Real Investment: Trends in the United States and International Comparisons Milka S. Kirova and Robert E. Lipsey NBER Working Paper No. 6404 February 1998 JEL Nos. C8, E21, E22 ABSTRACT 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. Milka S. Kirova Department of Economics School of Business and Administration Saint Louis University 3674 Lindell Boulevard St. Louis, MO 63108 Robert E. Lipsey National Bureau of Economic Research 50 East 42nd Street, 17th Floor New York, NY 10017-5405 [email protected]
