2016) confirmed that the overinvestment in the 1980s and 1990s led to a high
capital-output ratio and a low rate of return on capital.
The intertemporal equilibrium dynamics of the
capital-output ratio in all countries (regions) is obtained by inserting (19) into (14):
The lower level of national investments, measured in international currency has a negative impact on the
capital-output ratio.
We choose the values of preference parameters [rho], [gamma], [lambda], and [beta] in such a way that our model economy's
capital-output ratio matches that of the U.
Barrell (2009) illustrates that the magnitude of the output scars suffered from this channel depend both on the magnitude of the rise in the user cost of capital and on the initial
capital-output ratio of the economy.
It helps to make consistent two empirical regularities: a capital-labor ratio that rises through time with a
capital-output ratio that stays rather constant (Romer 1989).
A sampling of topics: the gains from international trade, protection and real wages, a reconsideration of the theory of value, the basic theorems of classical welfare economics, the economic implications of learning by doing, economies with a finite set of equilibria, and the influence of the
capital-output ratio on real national income.
Next we explore how the
capital-output ratio changes in the model.
It includes, such factors as: (i) productivity, (ii) input-output ratio, and (iii)
capital-output ratio.
Equating the two equations for investment provides a growth path for income that is driven mainly by savings, as the
capital-output ratio is constant, i.
The transitional dynamics of both the debt to GDP and the
capital-output ratio after a temporarily increased primary surplus ratio is traced out algebraically.
