Capital-goods prices and investment, 1870-1950

The relative price of capital goods, an important component of the user cos t of capital, has rarely been incorporated into comparative studies of long -run capital accumulation. This article constructs and explores a data set for capital-goods and equipment prices covering the 1870-1950 period for 11 OECD countries. We document substantial differences across countries in th e relative prices of capital goods, but also find convergence in those pric es over time. Finally, we show that relative capital-goods prices are stron gly negatively correlated with investment rates.