Thursday , November 14 2019
Home / Econbrowser - James Hamilton / Gross vs. Net Investment, Pre- and Post-TCJA

Gross vs. Net Investment, Pre- and Post-TCJA

Summary:
In other words, the sugar high fades. Brad Setser has noted how weak nonresidential fixed investment has been, despite the TCJA. It looks worse when looking at net — rather than gross — investment. Figure 1: Gross nonresidential fixed investment (blue, left log scale), and estimated net nonresidential fixed investment (brown, right log scale), all in billions Ch. 2012$, SAAR. Net investment calculated by subtracting quadratically interpolated annual capital consumption, and assuming annualized 0.08% increase throughout 2019. Light orange denotes TCJA in full effect, very light orange denotes TCJA application to equipment. Source: BEA and author’s calculations.

Topics:
Menzie Chinn considers the following as important:

This could be interesting, too:

Menzie Chinn writes Neel Kashkari at Madison: “Kashkari says he takes comfort from yield curve shape”

Tyler Cowen writes Tuesday assorted links

Tyler Cowen writes Television facts of the day

Tyler Cowen writes Monday assorted links

In other words, the sugar high fades. Brad Setser has noted how weak nonresidential fixed investment has been, despite the TCJA. It looks worse when looking at net — rather than gross — investment.

Figure 1: Gross nonresidential fixed investment (blue, left log scale), and estimated net nonresidential fixed investment (brown, right log scale), all in billions Ch. 2012$, SAAR. Net investment calculated by subtracting quadratically interpolated annual capital consumption, and assuming annualized 0.08% increase throughout 2019. Light orange denotes TCJA in full effect, very light orange denotes TCJA application to equipment. Source: BEA and author’s calculations. 

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

Leave a Reply

Your email address will not be published. Required fields are marked *