(Why) is Investment Weak?

16 Pages Posted: 1 Apr 2015

See all articles by Ryan Banerjee

Ryan Banerjee

Bank for International Settlements (BIS)

Jonathan Kearns

Bank for International Settlements (BIS) - Monetary and Economic Department

Marco J. Lombardi

Bank for International Settlements (BIS) - Monetary and Economic Department

Date Written: March 2015

Abstract

In spite of very easy financing conditions globally, investment has been rather weak in the aftermath of the Great Recession. What explains this apparent disconnect? The evidence suggests that, historically, uncertainty about the future state of the economy and expected profits play a key role in driving investment, and financing conditions less so. As a result, investment after the Great Recession appears to have been broadly in line with what could have been expected based on past relationships. A stronger recovery of investment would seem to depend on a reduction in economic uncertainty and expectations of stronger future growth.

JEL Classification: E22, E27, C33

Suggested Citation

Banerjee, Ryan and Kearns, Jonathan and Lombardi, Marco Jacopo, (Why) is Investment Weak? (March 2015). BIS Quarterly Review March 2015, Available at SSRN: https://ssrn.com/abstract=2580278

Ryan Banerjee (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Jonathan Kearns

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Marco Jacopo Lombardi

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland
+41612809492 (Phone)

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