After the health crisis, anything could weaken corporate investment

Several mechanisms are likely to weaken corporate investment in OECD countries after the end of the health crisis: Significant precautionary savings by households, ( 1) weakening domestic demand; Another wave of deindustrialisation, due to the fall in demand for durable goods; Higher borrowing costs for companies; The higher level of corporate debt after the crisis; The fall in market capitalisation (in Tobin’s q). It is therefore going to be vital to stimulate corporate investment (with tax cuts, low interest rate loans, measures to restore household confidence such as assistance for job creation). As has been the case after all pandemics since the 14th century: O. Jorda, S. Singh, A. Taylor “Longer-run economic consequences of pandemics” CEPR Discussion Paper no. 14543, March 2020