Economic growth and the relative price of capital
نویسنده
چکیده
This paper examines empirically the relationship between the relative price of capital and the rate of economic growth. In the results. machinery appears to bc the most important component of capital: when the relative price of machinery and the relative price of nonmachinery are included in a Barro ( 199 1) growth regression, a strong negative relationship between growth and the machinery price emerges while the nonmachinery price enters insignificantly. These results indicate that the tax treatment of machinery is an important policy instrument with respect to long-term growth and welfare. Kry \vords: Economic growth; Investment: Machinery investment; Price of capital JEL c~lussjfic~utiorl: E60; 040
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