 The Effect of Net Foreign Assets on Saving RateNissim Ben David and Zvi Winer Journal of Empirical Economics, 2014, vol. 3, issue 3, 146-162 Abstract: Observing empirical data we find that many countries try to delay the decision of increasing saving rate in order to avoid a decrease of the living standards. However the delay leads a deterioration of countries financial stability.We present a simple theoretical model that connects between countries saving rate and their net foreign assets. Using cross section data set of 135 countries in 2010 we estimated the econometric relation between saving rate in 2010 as dependent variable and two explanatory variables: the current account in 2010 and the aggregated current account during 1980-2010. Our findings show that industrial countries in a bad financial state tend to decrease their saving rate as external debt is larger causing to deterioration in external debt while countries with good financial state tend to increase their saving rate and the tendency increase as financial state becomes better. Only in countries with a very large external debt saving rate tends to grow. The results point that gross foreign debt will keep increasing and will worsen world financial state causing increased risk of getting into a world crisis. Keywords: net foreign assets; saving rate; financial state (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:rss:jnljee:v3i3p4 Access Statistics for this article More articles in Journal of Empirical Economics from Research Academy of Social Sciences |
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