EconPapers    
Economics at your fingertips  
 

Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis

David Laibson and Johanna Mollerstrom

Economic Journal, 2010, vol. 120, issue 544, 354-374

Abstract: Bernanke (2005) hypothesised that a 'global savings glut' was causing large trade imbalances. However, we show that the global savings rates did "not" show a robust upward trend during the relevant period. Moreover, "if" there had been a global savings glut there should have been a large investment boom in the countries that imported capital. Instead, those countries experienced consumption booms. National asset bubbles explain the international imbalances. The bubbles raised consumption, resulting in large trade deficits. In a sample of 18 OECD countries plus China, movements in home prices alone explain half of the variation in trade deficits. Copyright © The Author(s). Journal compilation © Royal Economic Society 2010.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (89)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis (2010) Downloads
Working Paper: Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecj:econjl:v:120:y:2010:i:544:p:354-374

Ordering information: This journal article can be ordered from
http://www.blackwell ... al.asp?ref=0013-0133

Access Statistics for this article

Economic Journal is currently edited by Martin Cripps, Steve Machin, Woulter den Haan, Andrea Galeotti, Rachel Griffith and Frederic Vermeulen

More articles in Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().

 
Page updated 2024-03-31
Handle: RePEc:ecj:econjl:v:120:y:2010:i:544:p:354-374