Financialization and Gross Fixed Capital Formation of the Total Economy

Second, we have analysed whether the financialization process has had any impact on the the level of investment of Eurozone countries. Thus, we have again tested whether the change (measured as a percentage of real GDP) of net financial assets, financial assets, or financial liabilities recorded for each period in the euro countries has had a significant effect on the evolution of the investment measured in real terms.

In this sense, the dependent variable represents the percent change of the real gross fixed capital formation (GFCF) of the Total Economy, measured according to the following formula: GFCFt-GFCFt-n/ GFCFt-n*100. Data about real GFCF (measured at 2010 prices) have been obtained from the AMECO database. Regarding the independent variables, these are related to the change in the main components of the financial balance sheet of the Total Economy. We have run three regressions, one for each of the possible explanatory variables: the change in the size of net financial assets; the change of the size of financial assets; and the change in the size of financial liabilities.

We have not found any significant relationship between the variation of the GFCF and the change recorded in the net financial assets, in the financial assets or in the financial liabilities, neither in the period

1999-2008 nor in the years 2008 to 2014. This result takes place when we test the existence of a linear or a quadratic relationship between the dependent and the explanatory variable.

Therefore, the financialization process would have not been a significant determinant of the increase of the investment before the crisis, when the average increase of total investment in the euro countries amounted to 54.5 percent, or of the decline in investment that has affected euro economies since 2008, during the Great Recession, when the average decline of investment in the Eurozone countries amounted to -19.6 percent.

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