Greece's Investment Gap

By Shiqing Hua, Marina Mendes Tavares, Xin Cindy Xu

January 28, 2022

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Format: Chicago

Shiqing Hua, Marina Mendes Tavares, and Xin Cindy Xu. Greece's Investment Gap, (USA: International Monetary Fund, 2022) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Greece’s investment rate plunged following the Sovereign Debt Crisis (SDC) and remained one of the lowest in the world in 2019. This paper explores recent investment dynamics and compares them against estimated benchmarks. Our results suggest that Greece has been under-investing since the SDC, with private investment notably lagging behind. The estimated investment gap ranges from 1.6–8 percent of GDP in 2019. Structural impediments have constrained corporate investment, while business cycle and balance sheet developments have held back household investment. Structural reforms are recommended to remove bottlenecks to corporate investment, improve efficiency of public investment, and boost household investment.

Subject: Expenditure, Financial crises, Financial institutions, Income, National accounts, Private investment, Public investment spending, Stocks

Keywords: Capital stock, Estimating benchmark investment, Europe, Global, Household investment, Income, Investment dynamics, Investment gap, Investment gap, Investment rate, Private investment, Public investment spending, Stocks, Structural reforms

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/013
Stock No:

WPIEA2022013
ISBN:

9798400201257
ISSN:

1018-5941

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