Investment Shocks and GDP Responses
نویسنده
چکیده
Some recent studies of the relationship between investment (or saving) and growth have found an absence of positive causality from the latter to the former. This finding poses a puzzle for growth theory and relies on groups of countries obeying a constant growth equation for its robustness. In this paper I investigate the causality from investment to GDP using postwar time-series data from the US economy. I find evidence of a permanent shock producing a strong positive long-run response in both investment and GDP. This is consistent with the view that capital accumulation is coincident with, but not a cause of, economic growth.
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