It is worrying that the return on corporate capital and the demand for return on equity have not fallen in line with interest rates

In the United States and the euro zone, the return on companies’ physical capital and return on equity have not fallen in line with interest rates . This divergence, which can be interpreted as an increase in the risk premium demanded on investment in corporate capital, has serious consequences: The fall in interest rates has not boosted public investment, the demand for return on equity has not fallen; Companies’ time horizon remains short despite the very low interest rates; Companies have an incentive to use debt leverage (increas e in debt, share buybacks) to obtain the demanded return on equity; Inequity increases between those that receive capital gains and the others.