Investment as the Key to Recovery in the Euro Area?

CEPS Policy Briefs, No. 326

12 Pages Posted: 20 Nov 2014

See all articles by Daniel Gros

Daniel Gros

Centre for European Policy Studies, Brussels; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 18, 2014

Abstract

Investment has declined in the euro area since the start of the economic and financial crisis, but this does not mean that there is necessarily an ‘investment gap’, explains Daniel Gros in this CEPS Policy Brief. Investment was probably above a sustainable level due to the credit boom before 2007. Moreover, the fall in the euro area’s potential growth − due to a combination of a sharp demographic slowdown and lower total factor productivity (TFP) growth − should also lead to a permanently lower investment rate. Increasing the investment rate might thus be the wrong target for economic policy.

Keywords: euro area, investment, euro, economic crisis, financial crisis

Suggested Citation

Gros, Daniel, Investment as the Key to Recovery in the Euro Area? (November 18, 2014). CEPS Policy Briefs, No. 326, Available at SSRN: https://ssrn.com/abstract=2527835

Daniel Gros (Contact Author)

Centre for European Policy Studies, Brussels ( email )

1 Place du Congres
B-1000 Brussels, 1000
Belgium

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
79
Abstract Views
536
Rank
555,601
PlumX Metrics