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An Empirical Study of Sectoral-Level Capital Investments in New Zealand

Razzak, Weshah (2013): An Empirical Study of Sectoral-Level Capital Investments in New Zealand. Forthcoming in: New Zealand Treasury Working Papers (2014)

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Abstract

I extend the Glick and Rogoff (1995) aggregate time-series, empirical, intertemporal model of country-investment (and the current account) to a sectoral-level, and estimate it for New Zealand. I fit the model to panel data of eleven industries from 1988-2009. The sectoral-level investment growth is a function of lagged investment level, sector-specific TFP shocks, country-specific TFP shocks, and global TFP shocks. The estimates seem robust to government spending shocks and Terms of Trade shocks.

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