U.S. Saving and Investment: Policy Implications

Martin Schmidt

Open Economies Review, 2003, vol. 14, issue 4, 395 pages

Abstract: Some economists have argued that the close association between domestic saving and investment rates justify polices aimed at altering domestic saving flows so as to influence domestic investment flows. This interpretation assumes an endogenous investment response. Equally likely, theoretically, is that the close association is maintained by movements in saving. The present paper explicitly examines the endogeneity of the U.S. saving and investment flows. Overall the results suggest that while the domestic saving rate responds endogenously, the domestic investment rate does not. This finding may limit the potential benefits of saving policies. Copyright Kluwer Academic Publishers 2003

Keywords: saving policies; investment; tax policy (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1023/A:1025312810428

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