Journal Article

In brief: high foreign real interest rates and investment in the 1990s

Abstract: This article argues that high interest rates abroad have substantially depressed private investment in most foreign members of the Group of Seven during the 1990s. Business investment has been especially hard hit and housing construction disrupted, although the effect on housing has been offset in some countries by stimulative fiscal policies. The author estimates that overall, high interest rates have reduced output in the foreign G-7 by 2 1/2 to 4 1/4 percent per year on average over 1990-93.

Keywords: Interest rates; Group of Seven countries; Investments, Foreign;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Quarterly Review

Publication Date: 1994

Volume: 19

Issue: Spr

Pages: 38-44