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Explaining Investment Trends in European Union Countries

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  • Weyerstraß, Klaus

Abstract

In the 1980s and, in particular, in the 1990s the countries of the European Union experienced divergent developments of gross fixed capital formation. Estimating an investment function for a panel of ten countries and analyzing the paths of the determinants of investment in the countries under consideration reveals that the different development of final demand is the main factor responsible for the divergences in investment. Other factors are disparities in the decline of real interest rates and of relative prices for capital goods.

Suggested Citation

  • Weyerstraß, Klaus, 2003. "Explaining Investment Trends in European Union Countries," IWH Discussion Papers 174/2003, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-174
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    5. Hartman, Richard, 1972. "The effects of price and cost uncertainty on investment," Journal of Economic Theory, Elsevier, vol. 5(2), pages 258-266, October.
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