Investing Our Way Out of the Crisis? The debate over how public investment banks in Europe can promote growth

Abstract

In June 2013 the International Monetary Fund (IMF) concluded that the role of fiscal multipliers had been underestimated in terms of GDP growth. This sparked a new debate on the negative effects of austerity measures and a discussion of the need for more public spending. In this context, the idea of increased investment financing through public investment banks has gained momentum in Europe. The European Investment Bank (EIB) is well placed to fill the existing investment gap through favorable loans, particularly to small and medium-sized enterprises (SMEs).