Abstract: The investment multiplier, is an important tool to study the pulling effect of investment on economic growth. There are four commonly used formulas for calculating the investment multiplier: the ratio of GDP increment to investment increment, the multiplier of two-sector economy, the multiplier of three-sector economy, and the multiplier of four-sector economy. Two methods, marginal analysis and regression analysis, are commonly used to calculate the investment multiplier. These multipliers are mature and reliable in theory, but the calculation results are quite different, which brings difficulties and confusion to the practical application. Which investment multiplier formula is more accurate and more consistent in reality? An empirical study is carried out by means of marginal analysis and regression analysis based on the forty-year data from 1980 to 2019. The results show that the investment multiplier of the four-sector economy calculated by regression analysis is the most accurate and reliable.

Key words: investment multiplier, marginal analysis, regression analysis, empirical research