2020
DOI: 10.5089/9781513548579.001
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Reexamining the National Savings-Investment Nexus Across Time and Countries

Abstract: Domestic savings and investment are positively correlated across countries and through time, as Feldstein-Horioka (FH) unveiled 40 years ago. We argue that an interpretation of this correlation based on market failures is more consistent with data patterns than alternative hypotheses. Moreover, resorting to instrumental variables techniques, we conclude that the relationship is causal: an exogenous rise in savings increases investment. This result holds in the full sample of countries and for emerging and deve… Show more

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Cited by 4 publications
(4 citation statements)
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“…In emerging market economies, domestic saving is positively correlated with investment -the empirical puzzle named after Feldstein and Horioka (FH). Using panel data analysis, David et al (2020) show that lower domestic saving causes lower investment, particularly in emerging market economies. Between 2016 and 2019, Brazil passed several important laws improving fiscal sustainability.…”
Section: Figure 21 Growth Dynamicsmentioning
confidence: 99%
“…In emerging market economies, domestic saving is positively correlated with investment -the empirical puzzle named after Feldstein and Horioka (FH). Using panel data analysis, David et al (2020) show that lower domestic saving causes lower investment, particularly in emerging market economies. Between 2016 and 2019, Brazil passed several important laws improving fiscal sustainability.…”
Section: Figure 21 Growth Dynamicsmentioning
confidence: 99%
“…In emerging market economies, domestic saving is positively correlated with investment-the empirical puzzle named after Feldstein and Horioka (FH). Using panel data analysis, David et al (2020) show that lower domestic saving causes lower investment, particularly in emerging market economies. without this reform.…”
Section: A Growth Dynamicsmentioning
confidence: 99%
“…In emerging market economies, domestic saving is positively correlated with investment-the empirical puzzle named after Feldstein and Horioka (FH). Using panel data analysis, David et al (2020) show that lower domestic saving causes lower investment, particularly in emerging market economies. Brazil was able to reduce its poverty rate more than many other counties with similar GDP growth rates and initial poverty rates (Figure 21.15, right chart).…”
Section: A Growth Dynamicsmentioning
confidence: 99%