Recommended articles: Risk management and investment

1. The price of capital goods: A driver of investment under threat. The dramatic decline in the relative price of capital goods has been an important – but overlooked – driver of real investment. This column analyses cross-country price data to establish that deepening trade integration and productivity growth have both contributed to this decline. The erosion of support for international trade and sluggish productivity growth may limit further declines in relative prices of capital goods, which could negatively affect real investment rates (VOXEU).
2. Investors’ simple diversification rules are even simpler than we thought. Investors who choose to build their own portfolios by stock-picking face the choice of how to diversify among stocks. The 1/N heuristic, equalising portfolio shares across stocks held, works well in practice. This column shows that investors who buy stocks often employ a different form of 1/N, dividing purchase value equally rather than maintaining a 1/N allocation. By narrowly framing their buy-day decision, these investors move their portfolios farther away from balance (VOXEU).
3. The Price of Capital Goods and the Threat to Investment (IMF Blog).
4. The Slope of the US Yield Curve and Risks to Growth (IMF Blog).
5. Finally, Economic Conditions Snapshot, June 2019: McKinsey Global Survey results (McKinsey).