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INVESTMENT AND GROWTH IN THE JOHANSEN PUTTY‐CLAY MODEL. A TECHNICAL NOTE (*)
Author(s) -
Skonhoft Anders
Publication year - 1991
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1991.tb00366.x
Subject(s) - economics , investment (military) , putty , monetary economics , econometrics , growth model , fixed investment , macroeconomics , microeconomics , capital formation , chemistry , law , political science , coating , organic chemistry , politics , profit (economics) , financial capital
The »paradoxical« result in Leif Johansens putty‐clay model, that savings and investment do not seem to matter for growth, is examined. Using a growth‐accounting framework it is shown that investment efforts generally influence output growth, but this influence is not revealed in a proper way when the investment ratio is fixed. Interpreted in a one‐country case, the existence of a positive relationship between the propensity to invest and the growth rate of output is demonstrated.