6533b7d6fe1ef96bd12657b6
RESEARCH PRODUCT
The Global Side of the Investments-Savings Puzzle
Joseph P. ByrneGiorgio FazioNorbert Fiesssubject
Savings Investment Feldstein-Horioka Puzzle Panel Nonstationarity Principal Components.jel:C31jel:F32jel:C33jel:F41description
In this paper we re-examine the long standing and puzzling correlation between national savings and investment in industrial countries. We apply an econometric methodology that allows us to separate idiosyncratic correlation at the country level from correlation at the global level. In a major break with the existing literature, we find no evidence of a long run relationship in the idiosyncratic components of savings and investment. We also find that the global components in savings and investments commove, indicating that they react to shocks of a global nature.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2008-05-01 |