Investment demand and structural change

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• dc.contributor.author García-Santana, Manuel
• dc.contributor.author Pijoan-Mas, Josep
• dc.contributor.author Villacorta, Lucciano
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2024-11-14T10:10:10Z
• dc.date.available 2024-11-14T10:10:10Z
• dc.date.issued 2019-08-01
• dc.date.modified 2024-11-14T10:06:29Z
• dc.description.abstract In this paper we study the joint evolution of the investment rate and the sectoral composition of developing economies. Using panel data for several countries in different stages of development we document three novel facts: (a) both the investment rate and the industrial weight in the economy are strongly correlated and follow a hump-shaped profile with development, (b) investment goods contain more domestic value added from industry and less from services than consumption goods do, and (c) the evolution of the sectoral composition of investment and consumption goods differs from the one of GDP. We build and estimate a multi-sector growth model to fit these patterns. Our results highlight a novel mechanism of structural change: the evolution of the investment rate driven by the standard income and substitution effect of transitional dynamics explains half of the hump in industry with development, while the standard income and relative price effects explain the rest. We also find that the evolution of investment demand is quantitatively important to understand the industrialization of several countries since 1950 and the deindustrialization of many Western economies since 1970.
• dc.format.mimetype application/pdf*
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1668
• dc.identifier.citation Econometrica, 2021, 89(6), 2751-2785.
• dc.identifier.uri http://hdl.handle.net/10230/44779
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 1668
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword structural change; investment; growth; transitional dynamics
• dc.subject.keyword Macroeconomics and International Economics
• dc.title Investment demand and structural change
• dc.title.alternative
• dc.type info:eu-repo/semantics/workingPaper