5 The “missing investment” puzzle The fourth force is on the investment side. A surprising trend in the years leading up to the pandemic was that levels of investment in advanced economies generally remained low despite a large fall in real interest rates.
If the only forces at play were on the saving side, then lower real rates should have triggered higher investment (Figure 1, middle panel). This means another force was likely holding back investment over this period, putting further downward pressure on real interest rates.