Showing papers on "Capital deepening published in 1988"
TL;DR: In this article, the authors consider the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development, and compare three models and compared to evidence.
16,965 citations
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535 citations
TL;DR: In this article, the authors modified the Kydland and Prescott "Time to Build" model to permit the capital utilization rate to vary, and the effect of this modification is to increase the amplitude of the aggregate fluctuations predicted by theory as the equilibrium response to technological shocks.
139 citations
TL;DR: In this article, an improved time series of fixed capital stock for independent accounting units within Chinese state industry is derived, which adhere as closely as possible to the standard national accounting concepts of gross domestic fixed capital formation and gross reproducible fixed assets.
Abstract: Measures of society's stock of fixed assets are necessary for describing production technology, evaluating capital-output ratios and analysing multi-factor productivity. Even in advanced industrial economies, existing series of fixed capital incorporate many weaknesses and arbitrary assumptions; in low-income nations, these problems are often severe. China is no exception. While recognizing the inherent difficulty of compiling capital stock estimates for an economy in which prices have long deviated from scarcity values, this article uses currently available materials to derive an improved time series of fixed capital stock for independent accounting units within Chinese state industry. Our objective is to produce new series that adhere as closely as possible to the standard national accounting concepts of gross domestic fixed capital formation and gross reproducible fixed assets. Despite the difficulties mentioned below, we believe that our new series are distinctly superior to existing figures for the analysis of capital deepening, multi-factor productivity and other aspects of Chinese state industry requiring estimates of fixed capital stock.
70 citations
TL;DR: The authors used financial statement data for large samples of U.S. and Japanese non-financial corporations to estimate the return to capital in each country for the period 1967-1983, and they found that the before-tax cost of corporate capital was higher for US firms than for their Japanese counterparts, with the average gap potentially as high as 5.8 percentage points.
Abstract: This paper uses financial statement data for large samples of U.S. and Japanese nonfinancial corporations to estimate the return to capital in each country for the period 1967—1983. Interpreting these as measures of the cost of capital, we find that the before-tax cost of corporate capital was higher for U.S. firms than for their Japanese counterparts, with the average gap potentially as high as 5.8 percentage points. The use of alternative measurement techniques alters the gap slightly but does not alter the basic finding. However, market returns in the two countries were much closer during the same period. Certain potential explanations for the gap in returns are rejected by empirical evidence, including differences in corporate taxation, differences in borrowing, and differences in asset mix. This leaves three potential explanations: differences in risk, differences in the tax treatment of individual capital income, and imperfections in the international flow of capital.
57 citations
TL;DR: In this article, the authors hypothesize that some conditions must obtain before educational expansion can have an affect on economic growth, and they compare the French findings to the U.S. findings and find them consistent.
Abstract: Human capital theory postulates that school expansion should foster economic growth, but credentialing theory questions such a relationship. We hypothesize that some conditions must obtain before educational expansion can have an affect on economic growth. First, the curriculum must be standardized and a large proportion of the age cohort beyond grade six must be enrolled for a sufficient period of time. Second, education and the economy must be linked. Third, the state must ensure that the quality of educational offerings is maintained. We use France to test these hypotheses because, starting in the late 19th century, the state played an important role in linking education and the economy. The state also followed a number of specific policies to ensure quality. The analysis from 1825-1975 supports our hypotheses. We compare the French findings to the U.S. findings and find them consistent.
43 citations
TL;DR: Empirical evidence on three assertions commonly made by population policy advocates about the relationships among population growth, human capital formation, and economic development is discussed and evaluated in the light of economic-biological models of household behavior and of its relevance to population policy.
31 citations
TL;DR: In this article, government deficits, capital flows, and interest rates are discussed, with a focus on the effects of capital flows on economic growth. But they do not consider the effect of tax reform.
Abstract: (1988). Government deficits, capital flows, and interest rates. Applied Economics: Vol. 20, No. 6, pp. 753-765.
30 citations
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TL;DR: In this article, the authors present quantitative measures of the annual flow and cumulative stock of capital flight from the Philippines from 1962-1986, showing that there was substantial capital flight during the period of investigation, amounting to almost four-fifths of the country’s external debt outstanding at the end of 1986.
Abstract: This paper presents quantitative measures of the annual flow and cumulative stock of capital flight from the Philippines from 1962-1986. Results indicate a substantial capital flight during the period of investigation, amounting to almost four-fifths of the country’s external debt outstanding at the end of 1986.
25 citations
TL;DR: The increasing importance of financial capital in the U.S. economy was discussed in this article, where the authors argue that financial capital is essential to the economic health of the United States.
Abstract: (1988). The Increasing Importance of Financial Capital in the U.S. Economy. Journal of Economic Issues: Vol. 22, No. 2, pp. 581-588.
TL;DR: In this paper, the authors argue that the conventional paradigm that capital movements respond to differences in interest rates between countries and simultaneously reduce interest-rate differentials has been difficult to demonstrate empirically.
Abstract: The conventional paradigm that capital movements respond to differences in interest rates between countries and simultaneously reduce interest-rate differentials has been difficult to demonstrate empirically. This paper argues that such a demonstrati on may be feasible if a simultaneous model is specified that describe s the dynamics of adjustment and if a data interval is chosen that re veals the dynamics. Examination of U.S. and Canadian data from the 19 60s supports the argument-with monthly observations, that paradigm is strongly supported; with quarterly observations, capital flows and i nterest rates are not significantly related. Copyright 1988 by MIT Press.
TL;DR: In this paper, the authors compare real rates of return to housing capital with returns to other forms of fixed reproducible capital and present speculations as to the reasons for the improvement in capital market efficiency.
Abstract: This paper compares real rates of return to housing capital with returns to other forms of fixed reproducible capital. All data are from the national income and capital accounts and are gross of taxes and depreciation. Returns to housing capital have been consistently lower than those to other capital during the fifty-five year period for which data are available. Since 1950, the disparity between returns to housing and other capital has narrowed steadily and substantially. The paper presents speculations as to the reasons for the improvement in capital market efficiency.
TL;DR: In this article, the authors apply stock and flow concepts to human capital and suggest an operational approach for applying the concepts to the analysis of the impact of human capital investments through education on economic growth.
Abstract: Human capital is becoming recognized as an increasingly important factor in rural economic development. Economic research, however, has not provided clear empirical support of the relationship between human capital investment and economic growth. This paper applies stock and flow concepts to human capital and suggests an operational approach for applying stock and flow concepts to the analysis of the impact of human capital investments through education on economic growth.
TL;DR: In this article, an empirical test was developed to determine whether capital moves more easily between industries within a country or between coun tries within an industry, and applied using cross-section data on accounting rates of return to capital of U.S. multinational corporations in 1966 and 1977.
Abstract: This paper develops an empirical test to determine whether, on average, capital moves more easily between industries within a country or between coun tries within an industry. The test is applied using cross-section dat a on accounting rates of return to capital of U.S. multinational corp orations in 1966 and 1977. It is found that international capital mob ility was greater in the earlier period, but domestic capital mobilit y tended to dominate in the later period. These findings are of parti cular importance to the field of international economics, since compe ting trade models use opposite assumptions as regards which type of c apital mobility is greater.
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TL;DR: The authors showed that the answer to the question of whether capital and energy are substitutes or complements depends on the aggregation of building capital and machinery capital into an aggregate input called capital, and they showed that machinery capital is a substitute for building capital.
Abstract: Controversy continues over the question of whether capital and energy are substitutes or complements. The authors find that the answer to the question partly depends on the aggregation of building capital and machinery capital into an aggregate input called capital. The authors' empirical results reject this aggregation. When building and machinery capital are treated as separate inputs, they find that machinery capital and energy are substitutes, while building capital and energy are complements. For policy purposes, this result implies that a rise in the price of energy will reduce building capital formation, while it will increase machinery capital formation.
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TL;DR: In this paper, the determinants of capital durability and utilization and their interdependence with investment decisions are analyzed, based on the view that the flow of undepreciated capital is an output to be used in future production.
Abstract: The purpose of this paper is to analyze the determinants of capital durability and utilization and their interdependence with investment decisions. The approach is based on the view that the flow of undepreciated capital is an output to be used in future production. At each date capital and non-capital inputs are combined to produce current output and the capital inputs to be used for future production. Thus capital accumulation occurs in a joint product context as two kinds of output are produced, one type for current sale and one type for future production. Another issue investigated in this paper concerns the allocation of resources within a firm between installing and utilizing capital and labor training activities. Often this problem is ignored in the theory of investment, not only because depreciation is exogenous, but also due to the treatment of labor as a variable factor of production. However, it is well recognized that firms cannot costlessly adjust labor. Thus the second purpose of this paper is to analyze the intertemporal relationship between the durability of capital and the growth rate of labor.
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TL;DR: This article showed that the desirability of opening a country's capital markets depends on the nature of the technology assumed, and that opening capital markets does not necessarily improve welfare for the nation or for the world as a whole.
Abstract: This paper reexamines the view that opening capital markets must have long-run benefits. The analysis shows that the desirability of opening a country's capital markets depends on the nature of the technology assumed. Models of knowledge-based growth predict that changes which alter the economy's level of production will also affect the economy's growth rate and hence the welfare of future generations. Standard neoclassical growth models imply no such effects on growth or welfare. If production does involve an important element of learning by doing, inference from the standard models may be seriously misleading. In particular, opening capital markets does not necessarily improve welfare for the nation or for the world as a whole.
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TL;DR: In this article, the authors isolate the common themes and policy recommendations found in the capital flight literature, and evaluate their statistical, conceptual, and empirical foundations, finding that there is no basis for presuming a stable link between any measure of capital flight and a nation's growth potential or ability to meet external obligations.
Abstract: This paper isolates the common themes and policy recommendations found in the capital flight literature, and evaluates their statistical, conceptual, and empirical foundations. We find that there is no basis for presuming a stable link between any measure of capital flight and a nation's growth potential or ability to meet external obligations. Thus, although popular measures of capital flight are occasionally indicative of underlying economic and political problems, "capital flight" is not generally useful as a policy target or reliable as a signal of when to intensify or mitigate efforts for policy reforms. Moreover, policies proposed to reduce capital flight and repatriate flight capital may even stymie investment, slow growth, shrink the tax-base, and the lower the country's debt financing capacity.
TL;DR: In this article, the relationship between the concepts of value added per worker, capital accumulation, and technical progress in industrial restructuring has been investigated, and it has been shown that for a large country, for example, for the L-intensive industry, with neutral technical progress occurring in the L intensive industry, it is possible for the terms of trade effect to lead to a decline in real labour productivity.
Abstract: Within the context of industrial restructuring, it is not uncQmmon to use terms ,such as 'higher value-added per worker', or 'low or high value added activities', and 'high technology' industries. The present note attempts to use the theoretical work in the field of international trade to sharpen our understanding of the relationships among the concepts of value added per worker, capital accumulation, and technical progress. We show that for a large country, capital accumulation raises the real value added per worker in both industries. With neutral technical progress occurring in the L-intensive industry, it is possible for the terms of trade effect to lead to a decline in real labour productivity.
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29 Nov 1988
TL;DR: In this article, the authors examine the evolving international markets for capital, labor, technology, and distribution, focusing on trade, public policy, and the future direction of academic research.
Abstract: The book examines the evolving international markets for capital, labor, technology, and distribution, focusing on trade, public policy, and the future direction of academic research.