Investment accelerations

Abstract

Following earlier studies on accelerations of output and the capital stock growth, we propose an adjusted method to identify accelerations in investment. The method ensures that the identified episodes are characterized by sustained increases in per capita investment growth to a relatively high rate. We identify 192 investment accelerations in 93 economies (34 advanced economies and 59 emerging and developing economies) over 1950–2022. Output growth is about 2 percentage points higher during investment accelerations than in other years. Our evidence also suggests that economic policy reform and institutional quality are positively associated with the likelihood that such an acceleration occurs.