The Global Side of the Investments-Savings Puzzle

Joseph Byrne, Giorgio Fazio and Norbert Fiess

Working Papers from Business School - Economics, University of Glasgow

Abstract: In this paper we re-examine the long standing and puzzling correlation between national savings and investment in industrial countries. We apply an econometric methodology that allows us to separate idiosyncratic correlation at the country level from correlation at the global level. In a major break with the existing literature, we find no evidence of a long run relationship in the idiosyncratic components of savings and investment. We also find that the global components in savings and investments commove, indicating that they react to shocks of a global nature.

Keywords: Savings; Investment; Feldstein-Horioka Puzzle; Panel Nonstationarity; Principal Components. (search for similar items in EconPapers)
JEL-codes: C31 C33 F32 F41 (search for similar items in EconPapers)
Date: 2008-05
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http://www.gla.ac.uk/media/media_76364_en.pdf (application/pdf)

Related works:
Journal Article: The Global Side of the Investment-Saving Puzzle (2009)
Journal Article: The Global Side of the Investment‐Saving Puzzle (2009)
Working Paper: The Global Side of the Investment-Savings Puzzle (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2008_14

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