The Global Side of the Investment-Saving Puzzle

Joseph P. Byrne (), Giorgio Fazio and Norbert Fiess

Journal of Money, Credit and Banking, 2009, vol. 41, issue 5, pages 1033-1040

Abstract: In this paper, we reexamine the long-standing and puzzling correlation between national saving and investment in industrial countries. We apply an econometric methodology that allows us to separate idiosyncratic correlation at the country level from correlation at the global level. In a major break with the existing literature, we find no evidence of a long-run relationship in the idiosyncratic components of saving and investment. We also find that the global components in saving and investments commove, indicating that they react to shocks of a global nature. Copyright (c) 2009 The Ohio State University.

Date: 2009

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Working Paper: The Global Side of the Investments-Savings Puzzle (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:mcb:jmoncb:v:41:y:2009:i:5:p:1033-1040

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