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Savings and Investment: Some International Perspectives

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  • Martin B. Schmidt

Abstract

Consistent with neoclassical growth models, recent estimates of the close association between domestic saving and investment rates may allow policy makers the opportunity to alter investment through the introduction of polices that alter domestic savings. However, such an interpretation presumes an endogenous investment response. Equally likely, at least theoretically, is that the close association is maintained by movements in domestic savings. The present paper explicitly examines the endogeneity of domestic saving and investment rates. For a subset of countries, including the United States, the results suggest that saving adjustments make up only a small portion of investment behavior.

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  • Martin B. Schmidt, 2001. "Savings and Investment: Some International Perspectives," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 446-456, October.
    • Handle: RePEc:wly:soecon:v:68:y:2001:i:2:p:446-456
    DOI: 10.1002/j.2325-8012.2001.tb00429.x
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    1. Jerry Coakley & Ana-Maria Fuertes & Fabio Spagnolo, 2004. "The Feldstein-Horioka puzzle is not as bad as you think," Money Macro and Finance (MMF) Research Group Conference 2003 17, Money Macro and Finance Research Group.

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