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Title: |
The Intertemporal Causal Dynamics between Fixed Capital Formation and
Economic Growth in the Group-of-Seven Countries |
| Author: |
Ghali, Khalifa
H.; Al-Mutawa, Ahmed |
| Author
Affiliation: |
United Arab
Emirates U |
| Source: |
International Economic Journal, Summer 1999, v. 13, no. 2, pp. 31-37 |
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Publication Date: |
Summer 1999 |
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Abstract: |
The debate between De Long and Summers
(1991, 1992) and Blomstrom, Lipsey and Zejan (1996) who reported
conflicting results on the relationship between fixed capital formation
and economic growth raised doubts on whether changes in a country's
capital formation shares in GDP have an influence on its future growth
rates. This paper addresses the issue again by examining the causal
patterns between the share of fixed investment in GDP and the growth
rate of per capita real GDP on an individual country basis, using time
series on each of the group-of-seven countries. The empirical results
suggest that the causal relationship between these variables may vary
significantly across the major industrialized countries that presumably
belong to the same growth group. Most importantly, no consistent
evidence is found that causality is running in only one direction.
Rather, causality between fixed investment and growth seems to have a
country-specific nature and may run in either directions. |
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