The Global Side of the Investment-Saving Puzzle

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The Global Side of the Investment-Saving Puzzle

Author Info

JOSEPH P. BYRNE
GIORGIO FAZIO
NORBERT FIESS

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Abstract

In this paper, we reexamine the long-standing and puzzling correlation between national saving 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 saving and investment. We also find that the global components in saving and investments commove, indicating that they react to shocks of a global nature. Copyright (c) 2009 The Ohio State University.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 41 (2009)
Issue (Month): 5 (08)
Pages: 1033-1040
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Handle: RePEc:mcb:jmoncb:v:41:y:2009:i:5:p:1033-1040

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Paper
- Joseph P. Byrne & Giorgio Fazio & Norbert Fiess, 2008. "The Global Side of the Investments-Savings Puzzle," Working Papers 2008_14, Department of Economics, University of Glasgow. [Downloadable!]

References listed on IDEAS
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