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

  • Peeters, Marga

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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Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 21 (1999)
Issue (Month): 5 (September)
Pages: 579-605

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Handle: RePEc:eee:jpolmo:v:21:y:1999:i:5:p:579-605
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505735

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  1. Jeffrey D. Sachs, 1981. "The Current Account and macroeconomic Adjustment in the 1970s," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 201-282.
  2. Obstfeld, Maurice, 1986. "Capital mobility in the world economy: Theory and measurement," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 24(1), pages 55-103, January.
  3. Feldstein, Martin, 1995. "Fiscal policies, capital formation, and capitalism," European Economic Review, Elsevier, vol. 39(3-4), pages 399-420, April.
  4. Lee, Yeonho, 1995. "The Effects of Fiscal Policy in a Two-Country World Economy: An Intertemporal Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 742-61, August.
  5. Martin Feldstein, 1991. "Domestic Saving and International Capital Movements in the Long Run and the Short Run," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 331-353 National Bureau of Economic Research, Inc.
  6. Westphal, Uwe, 1983. "'Domestic saving and international capital movements in the long run and the short run' by M. Feldstein," European Economic Review, Elsevier, vol. 21(1-2), pages 157-159.
  7. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
  8. Maurice Obstfeld and Kenneth Rogoff., 1994. "The Intertemporal Approach to the Current Account," Center for International and Development Economics Research (CIDER) Working Papers C94-044, University of California at Berkeley.
  9. Tobin, James, 1983. "'Domestic saving and international capital movements in the long run and the short run' by M. Feldstein," European Economic Review, Elsevier, vol. 21(1-2), pages 153-156.
  10. Van Wincoop, E. & Marrinan, J., 1993. "Public and Private Saving and Investment," Papers 546, Stockholm - International Economic Studies.
  11. Bini-Smaghi, Lorenzo & Del Giovane, Paolo, 1996. "Convergence of inflation and interest rates prior to EMU: An empirical analysis," Journal of Policy Modeling, Elsevier, vol. 18(4), pages 377-395, August.
  12. Mitchell, Peter R. & Sault, Joanne E. & Smith, Peter N. & Wallis, Kenneth F., 1998. "Comparing global economic models," Economic Modelling, Elsevier, vol. 15(1), pages 1-48, January.
  13. Baxter, M. & Crucini, M.J., 1990. "Explaining Saving/Investment Correlation," RCER Working Papers 224, University of Rochester - Center for Economic Research (RCER).
  14. Patrick Artus, 1995. "Change réel du dollar, déficit extérieur américain et comportement d'épargne," Annals of Economics and Statistics, GENES, issue 39, pages 123-147.
  15. Eisner, Robert, 1994. "National Saving and Budget Deficits," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 181-186, February.
  16. repec:adr:anecst:y:1995:i:39:p:06 is not listed on IDEAS
  17. repec:adr:anecst:y:1995:i:39 is not listed on IDEAS
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