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Real Interest Rates, Saving and Investment

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  • Smith, Jennifer C.

Abstract

This paper investigates the determinants of real interest rates at world and country level. The starting point is the idea that real interest rates re°ect the interaction of desired saving and planned investment, using the framework developed by Barro and Sala-i-Martin (1990) and Barro (1992). The paper updates previous results and extends the analysis to study long real interest rates. We analyse which factors have been responsible for real rate `regime shifts' during 1959 to 1992. We examine the determinants of interest rate di®erentials across ten major industrialised countries and provide estimates of the extent of capital market integration.

Suggested Citation

  • Smith, Jennifer C., 1996. "Real Interest Rates, Saving and Investment," Economic Research Papers 268703, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:268703
    DOI: 10.22004/ag.econ.268703
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    References listed on IDEAS

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    1. Robert J. Barro & Xavier Sala-i-Martin, 1990. "World Real Interest Rates," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 15-74, National Bureau of Economic Research, Inc.
    2. Ford, Robert & Laxton, Douglas, 1999. "World Public Debt and Real Interest Rates," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 15(2), pages 77-94, Summer.
    3. Barro, Robert J, 1992. " World Interest Rates and Investment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(2), pages 323-342.
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    Cited by:

    1. Barry Eichengreen, 2015. "Wall of Worries: Reflections on the Secular Stagnation Debate," IMES Discussion Paper Series 15-E-05, Institute for Monetary and Economic Studies, Bank of Japan.

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