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Savings-Investments Relationship in an Open Economy

Florin Pavelescu ()

Romanian Journal of Economics, 2009, vol. 29, issue 2(38), 85-106

Abstract: This paper reviews the conceptual-theoretical framework related to the analysis of the savings-investments relationship in an open economy and reveals the main trends of the respective relationship in the consolidated market economies and emerging countries during the second part of the 20-th century and first decade of the 21-st century. In this context, the author proposes some improvements in the savings-investments relationship analysis methodology, emphasizing the role of the foreign trade balance stock on the values of discrepancy between the savings and investments and of the Feldstein-Horioka econometric model estimated parameters. The respective methodological improvements are applied in the case of Romania for the period 1990-2007. At the end of the paper some guidelines for the savings-investments relationship modeling are presented in order to avoid recession and assure the premises for a sustainable economic growth.

Keywords: state budget deficit; external trade balance stock; Grubel-Lloyd Index generalized form; Feldstein-Horioka model; error-correction model. (search for similar items in EconPapers)
JEL-codes: B23 C13 C20 C22 O16 (search for similar items in EconPapers)
Date: 2009
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Handle: RePEc:ine:journl:v:2:y:2009:i:38:p:85-106