Abstract
The aim of this paper is to evaluate relative over-investment or under-investment of economies. To achieve this, we build a panel regression for 122 countries, where rates of investment and capital-output ratios are explained by key fundamental variables stemming from the theory in Chapter 1. We present implied-equilibrium values for both variables and all the countries in the sample. Countries of the former Soviet Union, the USA and Germany, for example, were identified as relatively underinvested. Large Asian economies such as China, India and Indonesia, and some countries of Latin America and Africa appeared to be overinvested. No significant imbalance was identified for Czechia, Slovakia and Hungary, while Poland showed to be rela- tively underinvested.
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