Denmark: Selected Issues
IMF Staff Country Reports, June 20, 2018
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Bibliographic details
- Published: June 20, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484362556.002
Investment trends and empirical findings
- Post-global financial crisis (GFC) weakness in Denmark’s aggregate investment cannot be fully explained by the output slowdown.
- Baseline accelerator model findings:
- Output slowdown played a role in the investment decline.
- Post-GFC investment has fallen beyond the level explained by output movements in most of the post-GFC period.
- Most recently, investment converged to the level explained by output movements.
- Augmented accelerator model findings:
- Additional factors had a significant impact on investment, including:
- High leverage
- Weak competition
- Elevated policy uncertainty
- Panel regressions using a panel of advanced economies show:
- Reduction in leverage can boost investment in the medium term.
- Product market reforms can boost investment in the medium term.
Policy implications and recommendations
- Well-designed policies are needed to boost private investment.
- Policy directions implied by analysis:
- Implement measures to reduce leverage in the corporate sector.
- Pursue product market reforms to strengthen competition.
- Reduce policy uncertainty to support investment recovery.
Keywords and topical focus (as presented in the source)
- asset, Asset prices, Commodity markets, Consumption, CR, exit tax, firm, Global, high-tech firm, IMF staff calculation, Income, interest rate, interest rate shock, investment, investment slowdown, ISCR, Pension spending, product market reform, tax rate
Source: Denmark: Selected Issues, IMF Staff Country Reports, June 20, 2018.
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- Country Report