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Chicago Fed Letter, No. 177a, May 2002
Is There Still an Investment Overhang, and if So, Should We Worry about It? (Special Issue)

Does an overhang in capital equipment still exist? If so, will investment spending
continue to decline? This article finds that an overhang may still exist for some
subsectors of investment, such as telecommunications equipment. This will lead
to below-trend growth in the near future. However, the authors forecast a capital
underhang by the end of 2002, which implies strong investment growth by 2003.



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