Is More Investment the Answer to Deficient Global Demand?
3 Pages Posted: 29 Aug 2014
Date Written: April 4, 2014
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
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