Front Matter Page

Research Department

Authorized for distribution by Gian Maria Milesi-Ferretti

Contents

• I. Introduction

• II. Structure of aggregate investment expenditures

  • A. Empirical evidence from input-output tables

  • B. Implications for tradables and nontradables

  • C. Alternative data sources

• III. Investment expenditures on nontradables in national accounts

  • A. Time-series data

  • B. Cross-section data

• IV. Compatibility with related empirical regularities in the literature

• V. Implications for modeling choices

  • A. Models with aggregate capital stock

  • B. Models with tradable and nontradable capital

  • C. Models with capital-skill complementarity

• VI. An application to the growth literature

  • A. Two-sector model

  • B. Quantitative results

• VII. Conclusions

• References

• Appendix I: Compatibility of national accounts and input-output table data

• Appendix II: Two-sector model with tradables and nontradables

  • Solution of the model, when θ = 1

  • Comparisons in common prices

  • Allowing for CES aggregation in consumption

• Tables

• 1. Summary of data sources

• 2. Investment expenditures on the output of different sectors of economic activity, as a fraction of total expenditures, 1968-90

• 3. Investment expenditures on the output of different sectors of economic activity, as a fraction Of total expenditures, USA, 1997

• 4. Investment expenditures on the output of different sectors of economic activity, as a fraction of total expenditures, 1998-2001

• 5. Tradability of sectoral output for selected countries

• 6. Summary of aggregate investment expenditures on nontradable goods, 1970-2000

• 7. Summary statistics for investment expenditures on nontradable goods, OECD data

• 8. Summary statistics for investment expenditures on nontradable goods, UN data

• 9. Correlation between expenditure shares on nontradables, UN data

• 10. Pooled time trends for sample countries with at least 30 annual observations

• 11. Cross-section comparison of investment expenditures on nontradable goods, UN data, 1950-1997

• 12. Cross-section comparison of investment expenditures on nontradable goods, PWT benchmark data

• 13. Investment expenditure share on nontradable goods by region, PWT 1996 benchmark data

• 14. Comparison of aggregate investment expenditure shares on construction in Burstein et al. (2004) and OECD national accounts data

• Figures

• 1. Investment expenditures share on nontradables in selected countries

• 2. Investment expenditure share on nontradables when residential construction is excluded from investment, cross-section averages

• 3. Investment expenditure share on nontradables for selected years

• 4. Investment expenditure share on nontradables for selected regions

• 5. Relative price of nontradables in investment, 1996-PWT benchmark data

• 6. Relative price of nontradables in investment in selected countries

• 7. Variation in investment rates under different model specifications