Post-crisis business investment in the euro area and the role of monetary policy

Business investment in the euro area strongly declined during the Global Financial Crisis and the Sovereign Debt Crisis. It has not yet rebounded to its pre-crisis trend despite the very expansionary monetary policy measures of the ECB. We analyse the sluggish recovery in business investment in the...

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Veröffentlicht in:Applied economics 2018-07, Vol.50 (34-35), p.3787–3797-3797
Hauptverfasser: Ademmer, Martin, Jannsen, Nils
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container_title Applied economics
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Jannsen, Nils
description Business investment in the euro area strongly declined during the Global Financial Crisis and the Sovereign Debt Crisis. It has not yet rebounded to its pre-crisis trend despite the very expansionary monetary policy measures of the ECB. We analyse the sluggish recovery in business investment in the euro area and the role of monetary policy in three steps. We investigate the main factors that have impeded business investment since the Global Financial Crisis. We empirically analyse how business investment has developed compared to typical patterns during other financial crises. Based on these results, we then discuss how effective monetary policy has been in stimulating business investment since the Global Financial Crisis. We conclude that business investment in the euro area has developed broadly in line with typical post-crisis patterns. Monetary policy significantly contributed to stabilize business investment at the beginning of the crises. In the aftermath of the crises, however, there seems to be little scope for monetary policy to further stimulate investment.
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subjects Aftermath
business investment
crisis
Economic analysis
Economic crisis
Economic models
Economic theory
Euro
Eurozone
Inflation
International finance
Investments
local projections
Monetary policy
Sovereign debt
title Post-crisis business investment in the euro area and the role of monetary policy
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