The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
In the 1980s, U.S. real investment in high technology equipment has grown rapidly while other components of business fixed investment have been weak. The surge in real high technology investment has been accompanied by a very sharp decline in its relative price, leading to difficult index number problems. When a previously estimated model of business fixed investment was extended to cover the period through 1988, the equation for nonresidential structures performed much as before while that for producers’ durable equipment substantially underpredicted recent actual outcomes. Further disaggregation revealed that the under-prediction related to the computing component.