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An Econometric Investigation into the Macroeconomic Relationship between Investment and Saving: Evidence from the EU Region

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  • Constantinos Alexiou

Abstract

Within the EU region, the emerging policy orientation of pursuing balanced or in-surplus budgets as a means of revitalising investment has dominated economic policy. Nonetheless, the notion that saving must be boosted in order to expand investment, is a contention that has to be taken with a 'pinch of salt'. This study, by elaborating on the causal dimension between investment and saving, provides econometric evidence on the basis of which investment is a variable of the utmost importance.

Suggested Citation

  • Constantinos Alexiou, 2004. "An Econometric Investigation into the Macroeconomic Relationship between Investment and Saving: Evidence from the EU Region," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(1), pages 1-14.
  • Handle: RePEc:taf:irapec:v:18:y:2004:i:1:p:1-14
    DOI: 10.1080/0269217032000148663
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    References listed on IDEAS

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    1. Cesaratto, Sergio, 1999. "Savings and Economic Growth in Neoclassical Theory," Cambridge Journal of Economics, Oxford University Press, vol. 23(6), pages 771-793, November.
    2. Lawrence H. Summers, 1988. "Tax Policy and International Competitiveness," NBER Chapters,in: International Aspects of Fiscal Policies, pages 349-386 National Bureau of Economic Research, Inc.
    3. Campbell, John Y, 1991. "A Variance Decomposition for Stock Returns," Economic Journal, Royal Economic Society, vol. 101(405), pages 157-179, March.
    4. Lawrence Summers & Chris Carroll, 1987. "Why Is U.S. National Saving So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 607-642.
    5. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    6. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    7. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    8. Martin Feldstein & Philippe Bacchetta, 1991. "National Saving and International Investment," NBER Chapters,in: National Saving and Economic Performance, pages 201-226 National Bureau of Economic Research, Inc.
    9. Skott,Peter, 2008. "Conflict and Effective Demand in Economic Growth," Cambridge Books, Cambridge University Press, number 9780521066310, March.
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    Citations

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    Cited by:

    1. NGUENA, Christian L., 2011. "Heterogeneity of Saving-Investment Causality and Fiscal Coordination Implication: The Case of an African Monetary Union," MPRA Paper 49411, University Library of Munich, Germany, revised 31 Aug 2013.
    2. Khemraj, Tarron & Langrin, R. Brian, 2009. "Dynamic interactions of bank assets in two foreign currency constrained economies," MPRA Paper 36620, University Library of Munich, Germany, revised Nov 2010.
    3. Alexiou, Constantinos & Argitis, Georgios, 2005. "Macroeconomic Policy and Unemployment: Empirical Evidence from the Euroland," Review of Applied Economics, Review of Applied Economics, vol. 1(1).

    More about this item

    Keywords

    Investment; saving; European Union; VAR;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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