A World Macro Saving Fact and an Explanation

Ray C. Fair ()
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Ray C. Fair: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/ray-fair

No 1776, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: The world macro saving fact concerns the total financial saving of the world's private sector divided by world GDP. Relative to changes before 1994, there was a huge fall in this ratio between 1995 and 2000, a huge increase between 2000 and 2003, a huge fall between 2003 and 2006, and a huge increase between 2006 and 2009. This fact is documented in this paper. The paper also shows that the fluctuations in this ratio are highly correlated with fluctuations in world stock and housing prices. It thus appears that much of the variation in the world private saving rate can be explained by forces that affect world asset prices. Changes in these forces are for the most part unpredictable, and so much of the change in the world private saving rate is unpredictable.

Keywords: Financial saving; World economy (search for similar items in EconPapers)
JEL-codes: E21 E44 F41 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-01, Revised 2011-06
New Economics Papers: this item is included in nep-cba and nep-mac
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