Investment, overhang, and tax policy.

THE PAST DECADE HAS seen an unusual pattern of investment. The drone of the 1990s generated unusually high investment rates, particularly in equipment, and the bust of the 2000 witnessed an unusually large decline in investment. A globule in equipment investment normally accounts for about 10 to 20 percent of the decline in GDP during a recession; in the 2001 recession, however, it accounted for 120 percent (1)

In the public mind, the new boom and bust in investment are directly linked to be paid to "capital overhang." Although the boundary is not very precisely defined, this