Evidence that Capital Formation is Over-Estimated in ICP 2011
13 Pages Posted: 2 Aug 2015
There are 2 versions of this paper
Evidence that Capital Formation Is Over-Estimated in ICP 2011
Date Written: July 19, 2015
Abstract
Using the ICP 2011’s cross-country data on input prices and project cost shares, I show that the construction prices in ICP 2011 are substantially underestimated in low and middle income countries. As a consequence, the PPP-adjusted construction in these countries is overestimated on average by about 100% and gross fixed capital formation as a share of GDP is overestimated by 25-30%. I also examine the ICP 2005 construction prices and show that there are similar problems with the ICP 2005 data.
Keywords: ICP 2011, ICP 2005, construction prices, PPP, construction data, capital data
JEL Classification: E30, O47
Suggested Citation: Suggested Citation