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Causes of declining investment activity in Austria

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Abstract

Austria’s share of investment relative to GDP, which is high by international standards, dipped significantly in recent years. This downtrend, which was also evident in peer economies, chiefly reflected an adjustment process in a climate of weaker long-term growth. While the international trend reversed in mid-2013, Austria’s investment share continued to decline. The main reasons for Austrian companies’ current reluctance to invest can be traced back to fragile demand and deep uncertainty. Lack of access to finance is unlikely to have dampened investment activity, as the higher level of internal financing has offset the diminishing importance of bank loans. Although there is some evidence of banks tightening their lending conditions, this is unlikely to have led to credit rationing, as demand for bank loans has also fallen off. Estimations based on a structural vector autoregressive (VAR) model also show that loan supply shocks have only had a small negative impact on growth.

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  • Gerhard Fenz & Christian Ragacs & Martin Schneider & Klaus Vondra & Walter Waschiczek, 2015. "Causes of declining investment activity in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 12-34.
    • Handle: RePEc:onb:oenbmp:y:2015:i:3:b:2
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    Cited by:

    1. Peter Mayerhofer & Michael Klien, 2016. "Unternehmensinvestitionen in den österreichischen Bundesländern. Entwicklung – Struktur – Funktion regionaler Förderung," WIFO Studies, WIFO, number 61950, April.
    2. Klaus S. Friesenbichler & Sandra Bilek-Steindl & Christian Glocker, 2021. "Österreichs Investitionsperformance im internationalen und sektoralen Vergleich. Erste Analysen zur COVID-19-Krise," WIFO Studies, WIFO, number 67163, April.

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    More about this item

    Keywords

    Austria; investment; business cycle; loan supply; credit crunch;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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