The Relative Price of Capital and Economic Structure

Roberto Samaniego () and Juliana Yu Sun

Review of Economic Dynamics, 2020, vol. 37, 127-155

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. (Copyright: Elsevier)

Keywords: Investment-specific technical change; Multi-sector growth models; Structural transformation; Capital goods prices (search for similar items in EconPapers)
JEL-codes: O11 O13 O33 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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DOI: 10.1016/j.red.2020.01.004

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