The conditions for a Sustainable U.S. Recovery: The Role of Investment
AbstractThe anemic U.S. economic recovery and the threat of a double-dip recession stem from the weakness of investment, due to excess capacity created in the euphoric years of the "new economy" bubble. The current imbalances in the corporate sector (i.e., the all-time-high indebtedness in the face of falling asset prices) are preventing investment from picking up and are laying the foundation for a new, long-lasting expansion. Tax reductions may create a cyclical upturn in the short run and may promote the anemic recovery, but such stimulus to demand is unsustainable in the long run. The root of the problem is the imbalance in the corporate sector, which will take time for correction.
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Bibliographic InfoPaper provided by EconWPA in its series General Economics and Teaching with number 0306001.
Length: 52 pages
Date of creation: 05 Jun 2003
Date of revision:
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sustainable recovery; investment; imbalance; corporate sector;
Other versions of this item:
- Philip Arestis & Elias Karakitsos, 2003. "The Conditions for Sustainable U.S. Recovery: The Role of Investment," Economics Working Paper Archive wp_378, Levy Economics Institute, The.
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
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