Data on output and prices for 11 EC member nations are analyzed to extract information on underlying aggregate supply and demand disturbances using a VAR decomposition. The coherence of the underlying shocks across countries and the speed of adjustment to these shocks are then compared to the results from US regional data. We find that the underlying shocks are significantly more idiosyncratic across EC countries than across US regions, which may indicate that the EC will find it more difficult to operate a monetary union. However a core of EC countries, made up of Germany and her immediate neighbors, experience shocks of similar magnitude and cohesion as the US regions. EC countries also exhibit a slower response to aggregate shocks than US regions, presumably reflecting lower factor mobility.

A broad set of possible determinants of private saving behavior is examined using data for a large sample of industrial and developing countries. Both time-series and crosssectional estimates are obtained. Results suggest that there is a partial offset on private saving of changes in public saving and (for developing countries) in foreign saving, that demographics and groivth are important determinants of private saving rates, and that interest rates and terms of trade have positive, but less robust, effects. Increases in per capita gross domestic product seem to increase saving at low income levels (relative to the United States) but decrease it at higher ones.Despite an extensive literature on saving behavior, several empirical issues have not been resolved conclusively, including the effects of real interest rates, demographic factors, and per capita income on private saving; the relationship between growth and saving; and the extent to which private saving offsets movements in public (dis)saving (Aghevli and others 1990 andDeaton 1992). This article extends the empirical knowledge of private saving behavior by exploiting data for a large sample of industrial and developing countries and by looking at a broad set of possible determinants of private saving. It uses both time-series and cross-sectional information because the variability of potential explanatory variables differs in those two dimensions. In particular, some variables seem to explain persistent country differences (for example, dependency ratios or relative per capita income), while others are correlated with year-to-year fluctuations (for example, the terms of trade or growth in gross domestic product-GDP). Fiscal variables seem to explain both some persistent long-term differences and short-term fluctuations.The existing literature tends to be limited to one of these two dimensions, one of the few exceptions being Schmidt-Hebbel, Webb, and Corsetti (1992), who use panel data to study behavior across developing countries. 1 Conclusions con-1. After the first version of this article was drafted, we discovered a study by Edwards (1996), covering related issues and coming to similar conclusions, but with a somewhat different empirical and policy emphasis.

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