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The Public-Private Savings Mirror and Causality Relations Among Private Savings, Investment, and (twin) Deficits: A Full Modeling Approach

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  • Peeters, Marga

Abstract

Relations between national public and private savings, domestic investment, and the current account are analyzed with the Global Econometric Model (National Institute, London). Simulation results obtained with this full modeling approach for the US, Japan, Germany and the UK are compared with estimation results from partial modeling approached adopted in the literature. The results from the two approaches are rather different. The simulation results indicate that private savings largely offset public savings (and vice versa) in the short run. In contrast with findings in partial models, a smaller effect of aggregate savings on investment is found and government deficits tend to increase current account imbalances.
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  • Peeters, Marga, 1999. "The Public-Private Savings Mirror and Causality Relations Among Private Savings, Investment, and (twin) Deficits: A Full Modeling Approach," Journal of Policy Modeling, Elsevier, vol. 21(5), pages 579-605, September.
  • Handle: RePEc:eee:jpolmo:v:21:y:1999:i:5:p:579-605
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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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