Investment ratio in growth equations

Autor: Rup Singh, B. Bhaskara Rao, Neelesh Gounder
Rok vydání: 2007
Předmět:
Zdroj: Applied Economics Letters. 14:565-568
ISSN: 1466-4291
1350-4851
DOI: 10.1080/13504850500461365
Popis: In the cross-country and time series studies on the determinants of the growth rate, capital stock is often proxied with the investment ratio due to lack of reliable data. While investment ratio may give good results with OLS, their robustness is doubtful. In addition there are other problems: (a) investment ratio may be a good proxy for the change in capital stock, but combining it with the level of employment to estimate a production function leads to misspecification bias; (b) it is not possible to impose any valid constraints on the coefficients of these variables and (c) if instrument variables are used to minimize any endogenous variable bias, the equation with the investment ratio seems to be fragile.
Databáze: OpenAIRE
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