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The Price of Capital Goods: A Driver of Investment Under Threat, Weicheng Lian, Natalija Novta, Evgenia Pugacheva, Yannick Timmer, Petia Topalova

Over the past three decades, the price of machinery and equipment fell dramatically relative to other prices in advanced and emerging market and developing economies. Using cross-country and sectoral data, we show that the decline in the relative price of tangible tradable capital goods provided a significant impetus to the capital deepening that took place during the same time period. The broad-based decline in the relative price of machinery and equipment, in turn, was driven by the faster productivity growth in the capital goods producing sectors relative to the rest of the economy, and deeper trade integration, which induced domestic producers to lower prices and increase their efficiency. Our findings suggest an additional channel through which rising trade tensions and sluggish productivity could threaten real investment growth going forward
Table Of Contents
Cover -- The Price of Capital Goods: A Driver of Investment Under Threat -- I. INTRODUCTION -- II. STYLIZED FACTS -- III. DRIVERS OF RELATIVE INVESTMENT PRICES -- A. Cross-country analysis -- B. Time-Series Analysis -- IV. RELATIVE PRICE OF INVESTMENT GOODS AND REAL INVESTMENT RATE -- A. Cross-Country Empirical Evidence -- B. Sectoral Empirical Evidence -- V. CONCLUSION -- REFERENCES -- APPENDIX -- Annex 1. Sources and Country Groupings -- Annex 2. Using Trade Data to Uncover Differences in Capital Goods Prices Across Countries -- Annex 3. Drivers of Relative Investment Prices: Across Countries
Literary Form
non fiction
Physical Description
1 online resource (37 pages)
Specific Material Designation
Form Of Item

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