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The Cyclical and Trend Behavour of Australian Investment and Savings

Author

Listed:
  • Bruce Felmingham

  • Arusha Cooray

Abstract

A spectral analysis of the Australian time series for the investment and savings ratios on quarterly data over the period from September 1959 to December 2005 reveals that the major cyclical components of the savings and investment ratios cohere strongly. This suggests there is a medium to long term relationship between investment and savings. Further, the investment and saving ratios cohere strongly with the business cycle suggesting a procyclical pattern of investment and saving behaviour on Australian data. A subsequent long memory analysis reveals that the saving and investment ratios, the investment ratio and real GDP and the savings ratio and real GDP are fractionally cointegrated. The policy implications are explained.

Suggested Citation

  • Bruce Felmingham & Arusha Cooray, 2008. "The Cyclical and Trend Behavour of Australian Investment and Savings," Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2007(3), pages 367-386.
    • Handle: RePEc:oec:stdkaa:5km7v18rmf8r
    DOI: 10.1787/jbcma-2007-5km7v18rmf8r
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    Cited by:

    1. Saten Kumar & Don J. Webber & Scott Fargher, 2012. "Testing the validity of the Feldstein--Horioka puzzle for Australia," Applied Economics, Taylor & Francis Journals, vol. 44(5), pages 599-605, February.

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