Aggregate Investment Expenditures on Tradable and Nontradable Goods

February 1, 2008

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Format: Chicago

Rudolfs Bems. Aggregate Investment Expenditures on Tradable and Nontradable Goods, (USA: International Monetary Fund, 2008) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper shows that aggregate investment expenditure shares on tradable and nontradable goods are very similar across countries and regions. Furthermore, the two expenditure shares have remained close to constant over time, with the average expenditure share on nontradables varying between 0.54-0.62 over the 1960-2004 period. These empirical findings offer a new restriction for two-sector models of the aggregate economy. Combined with the fact that the relative price of nontradables correlates positively with income and exhibits large differences across space and time, our findings suggest that tradable and nontradable goods in investment can be modeled using the Cobb-Douglas aggregator.

Subject: Consumption, Expenditure, Manufacturing, National accounts, Personal income

Keywords: Capital stock, Expenditure share, Investment expenditure, Positive correlation, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/045
Stock No:

WPIEA2008045
ISBN:

9781451869071
ISSN:

1018-5941

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