Three possible policies for financing the investment needed in the euro zone

The euro zone will have to implement a very significant increase in its investment rate (close to 5 percentage points of GDP) to make the investments needed for the energy transition, improved water management, the maintenance of biodiversity, and the development of the arms industries. There are only three policies to increase the investment rate in these proportions: Raising the central bank’s inflation target to be able to conduct an expansionary monetary policy, have real interest rates lower than long-term growth, and thus allow fiscal policy to be expansionary without driving up the public debt ratio; Increasing the tax burden; Reducing the proportion of corporate earnings distributed to shareholders (in the form of dividends or share buybacks) and, correspondingly, increasing the proportion of earnings invested.