Is Business Saving Really None of Our Business?

Ricardo Bebczuk () and Eduardo Cavallo

IIE, Working Papers from IIE, Universidad Nacional de La Plata

Abstract: This paper revisits the role of business saving in the economy by critically scrutinizing the existing macroeoconomic and corporate finance literatures. We assemble and exploit a broad international, unbalanced panel of 47 countries over 1995-2013 on saving and investment by institutional sector to shed new light on the relevance of business saving for private saving and investment around the world. We show that businesses contribute on average more than 50% of national saving around the world. Using this unique dataset, we find evidence of partial piercing of the corporate veil: a $1 increase in business saving gives rise to a decrease of approximately $0.40 in household saving–thereby raising private saving by as much as $0.60. We also find that a $1 increase in business saving increases private investment by as much as $0.20 in countries where limited financing is a binding constraint on firms’ invesment. The evidence suggests that business saving and external financing are complementary sources of financing for investment.

Keywords: Business Saving; Corporate Veil; Domestic Saving; Corporate Finance. (search for similar items in EconPapers)
JEL-codes: E21 E22 G32 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2015-08
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https://www.depeco.econo.unlp.edu.ar/wp/wp-content/uploads/2017/05/doc107.pdf (application/pdf)

Related works:
Journal Article: Is business saving really none of our business? (2016)
Working Paper: Is Business Saving Really None of Our Business? (2015)
Working Paper: Is Business Saving Really None of Our Business? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:akh:wpaper:107

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