Is More Investment the Answer to Deficient Global Demand?

3 Pages Posted: 29 Aug 2014

See all articles by Il Houng Lee

Il Houng Lee

The Bank of Korea - Monetary Policy Department; Korea Institute for International Economic Policy

Da Young Yang

Korea Institute for International Economic Policy

Date Written: April 4, 2014

Abstract

We use the approach used by Lee et al. (IMF WP/13/83) to estimate the optimal levels of investment for G20 Countries (Panel first-differenced GMM). We found that the G20 countries as a whole are investing 0.09 percentage point of global GDP above the desired level. More specifically, the non-European AMs need to raise investment by 0.2 percentage point of global GDP while the G20 EMs should reduce investment by 0.28 percentage point of the global GDP. Thus, to obtain additional lift for global economic growth from efficiency gains, a part of investment in EMs would need to be used for investment in non-European AMs.

Keywords: Investment, Emerging Markets

Suggested Citation

Lee, Il Houng and Yang, Da Young, Is More Investment the Answer to Deficient Global Demand? (April 4, 2014). KIEP Research Paper No. World Economic Update 14-14. Available at SSRN: https://ssrn.com/abstract=2487732 or http://dx.doi.org/10.2139/ssrn.2487732

Il Houng Lee (Contact Author)

The Bank of Korea - Monetary Policy Department

39, Namdaemun-ro
Jung-gu
Seoul, 100-794
Korea, Republic of (South Korea)

Korea Institute for International Economic Policy ( email )

Seoul 137-602

Da Young Yang

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

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