Front Matter Page
Western Hemisphere Department
Contents
1 Introduction and Executive Summary
2 The Shift in Okun Curves and the Decline in Potential Output Growth
2.1 The leftward shift of the Okun curve
2.2 Slowdowns in potential output typically became evident only with the benefit of hindsight
3 Potential Output, n + g, and the Cost of Capital: Theory
3.1 A model of potential output growth
3.2 What happens if n + g falls?
4 Investment, n + g, and the cost of capital: Theory
4.1 Investment, n + g, and the cost of capital in the steady state
4.2 What happens with investment if n + g falls?
4.3 Intuition: How can falling investment coincide with rising capital-output ratios?
4.4 Low interest and leverage
5 Potential Output, Investment, n + g, and the cost of Capital: Evidence
5.1 n + g and interest rates have fallen
5.2 Stylized facts
6 Country Case: Japan
7 The Impact of Higher Investment
7.1 Could Low Investment have been the Cause of Low Growth?
7.2 The Impact of Higher Investment on Output and Consumption Levels
8 Is Investment in Advanced Countries too Low?
9 The Trap of Low Interest Rates
10 Conclusion
Bibliography
Data Sources