Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174418
Authors: 
Libman, Emiliano
Montecino, Juan Antonio
Razmi, Arslan
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2017-09
Abstract: 
Existing empirical studies have focused on determinants of investment. We focus instead on episodes of accelerated capital stock growth that last eight years or longer. We find that episodes are relatively common, even in low growth regions, but more so in middle income and Asian countries. After identifying 175 such episodes between 1950-2014, we employ probit analysis to explore their characteristics. Turning points in investment tend to be preceded by undervalued real exchange rates, macroeconomic stability (low inflation), and net capital outflows (especially portfolio outflows). We also find strong evidence for a negative correlation with the capital to output ratio and per capita GDP, and a positive correlation with a human capital index. Investment surges appear to be associated with accelerated structural change in the economy.
Subjects: 
Investment
accumulation
real exchange rate
terms of trade
JEL: 
E22
F41
E20
Document Type: 
Working Paper

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