Explaining the recent slump in investment: the role of expected demand and uncertainty

Matthieu Bussiere, Laurent Ferrara and Juliana Milovich ()

Rue de la Banque, 2017, issue 44

Abstract: The weakness in business investment in several advanced economies since the global financial crisis has prompted debate over the main drivers behind this trend and the possible policy responses, if any. This Rue de la Banque summarises an empirical investigation of the main determinants of business investment since 1995 for a panel of twenty-two advanced economies. In the short term, while measures of capital cost seem to play a modest role, low expected demand explains most of the weakness in business investment, with uncertainty also making a contribution. However, systematically over-optimistic business investment.

Date: 2017
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Related works:
Working Paper: Explaining the Recent Slump in Investment: the Role of Expected Demand and Uncertainty (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:rueban:2017:44

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