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The Development of German Investment Activity in a European Comparison – the Role of Price and Volume Effects

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  • Isabel Hanisch
  • Elisabeth Wieland
  • Timo Wollmershäuser

Abstract

Since the turn of the millennium, many have deplored the weak Investment activity in Germany in an international comparison. However, the discussion often only looks at the nominal investment ratio, i.e. the proportion of nominal investment in the nominal gross domestic product. However, price developments contained in this figure hide the real investment activity. If we break down the rate of change of the German investment ratio into price and volume effects and compare this to the development of EU countries since 1996, we see that there has been a comparatively positive development in Germany since the financial crisis at the latest. While investment in equipment and intellectual property in the period 2007-2014 was similar to that of the period 1996-2007, the growth in construction investment is greater than in most EU Member States.

Suggested Citation

  • Isabel Hanisch & Elisabeth Wieland & Timo Wollmershäuser, 2015. "The Development of German Investment Activity in a European Comparison – the Role of Price and Volume Effects," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(16), pages 39-50, August.
    • Handle: RePEc:ces:ifosdt:v:68:y:2015:i:16:p:39-50
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L89 - Industrial Organization - - Industry Studies: Services - - - Other
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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