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Author/Editor:
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Bergljot Barkbu ; Pelin Berkmen ; Pavel Lukyantsau ; Sergejs Saksonovs ; Hanni Schoelermann
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Publication Date:
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February 19, 2015
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Electronic Access:
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Free Full text
(PDF file size is 1,054KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
Investment across the euro area remains below its pre-crisis level. Its performance has been weaker than in most previous recessions and financial crises. This paper shows that a part of this weakness can be explained by output dynamics, particularly before the European sovereign debt crisis. The rest is explained by a high cost of capital, financial constraints, corporate leverage, and uncertainty. There is a considerable cross country heterogeneity in terms of both investment dymanics and its determinants. Based on the findings of this paper, investment is expected to pick up as the recovery strengthens and uncertainty declines, but persistent financial fragmentation and high corporate leverage in some countries will likely continue to weigh on investment.
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Order a print copy
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Series:
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Working Paper No. 15/32
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Subject(s):
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Investment | Euro Area | Cost of capital | Credit | Corporate debt | Econometric models | Cross country analysis
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English
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Publication Date:
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February 19, 2015
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ISBN/ISSN:
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9781498364805/1018-5941
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Format:
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Paper
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Stock No:
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WPIEA2015032
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Pages:
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30
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Price:
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Please address any questions about this title to
publications@imf.org
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