Evaluating impacts on the investment cycle

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Scope

Does the option impact on the investment cycle?

Definition

The cyclical fluctuation in the aggregate investment rate, or investment cycle, is a central feature driving the business cycles, in which prosperous periods associated with high productivity, consumer confidence, aggregate demand and prices usually end with a contraction and stagnation period associated with the failure and liquidation of unprofitable investments and the liberation of capital for more productive investment.

The investment cycle, however, responds to measurable interventions in the fields of fiscal policy and monetary policy. The lowering of interest rates and the reduction of taxes, in fact, encourage investment and are indeed instrument used by governments to level out oscillations of the business cycle and their adverse consequences to the economic environment and in particular in terms of job losses.

Result

Further information

Indicators:

The following Eurostat Structural Indicators (Economic Reform) are relevant to address the key question:

• Business investment

The following Eurostat Sustainable Development Indicators (Economic Development) are relevant to address the key question:

• Total Investment -Total gross fixed capital formation as a percentage of GDP
• Public Investment
• Business Investment
• Gross household saving

The following Eurostat Euro Indicators (Industry, commerce and services) are relevant to address the key question:

• Industrial production - Capital goods - Index (2000=100) - SA
• Industrial production - Capital goods - Index (2000=100) - Percentage change t/t-1 - SA
• Industrial production - Capital goods - Index (2000=100) - Percentage change t/t-12 - NSA

See also

IA TOOLS

References

This text is for information only and is not designed to interpret or replace any reference documents.