Report
Why have companies underinvested since the subprime crisis?
We examine the situations of the United States, the euro zone and France. When we look at the net corporate investment rate in nominal terms (which avoids various measurement biases) or at growth in the net corporate capital stock, we see clear underinvestment since the subprime crisis, hence the slowdown in potential growth. To correct this underinvestment and lift long-term growth, its causes must first be identified. It definitely does not result from the trend in interest rates or corporate earnings. It may then result from: The effect of high uncertainty; An acceleration in offshoring; An abnormal required return on equity. The underinvestment is most likely due to uncertainty, a high required return on equity and, in the euro zone and France, an acceleration in offshoring. Th is leads to the following economic policy recommendations : Strong countercyclical action to reduce uncertainty; Public-private co-financing to reduce the required return on equity.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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