Has the Rate of Investment Fallen?

17 Pages Posted: 18 Aug 2004

See all articles by Martin S. Feldstein

Martin S. Feldstein

National Bureau of Economic Research (NBER) (deceased); Harvard University (deceased)

Date Written: May 1981

Abstract

Although the ratio of gross fixed nonresidential investment to GNP has decreased very little since the late 1960rs, the corresponding net investment ratio declined by nearly 40 percent between the second half of the 1960's and the second half of the 1970's. Four-fifths of this decline was due to the increased ratio of depreciation to GNP and only one-fifth to the decreased ratio of gross investment to GNP. The increased ratio of depreciation to GNP was in turn due in equal amounts to the higher ratio of capital to GNP and to the higher rate of depreciation. Nearly half of the higher depreciation rate was due to the increased rate of depreciation of equipment and nearly half to the increased share of equipment in the capital stock.

Suggested Citation

Feldstein, Martin S., Has the Rate of Investment Fallen? (May 1981). NBER Working Paper No. w0679, Available at SSRN: https://ssrn.com/abstract=349083

Martin S. Feldstein (Contact Author)

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Harvard University (deceased)

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