Investment data and the empirical relationship between exporters, government and economic growth

Abstract

The effect of using gross investment data and utilized net capital stock data respectively to construct the investment-output ratio in growth equations modelling the effects of exporters and the government is demonstrated. Almost all such models in the literature use the former data, and yet, as discussed by Alexander (1994a), the latter data are theoretically superior. For a group of G7 countries evidence is produced that suggests the possibility that other researchers findings reflect the data they use to construct their investment-output ratio rather than a true relationship between exporters and the government respectively and economic growth.