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Macroeconometric modeling of saving and investment for Mercosur countries

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  • Tapen Sinha

    (Instituto Tecnológico Autónomo de México)

  • Dipendra Sinha

    (Macquarie Univerisity)

Abstract

In the long run, the present value of current account balance can not grow indefinitely large without precipitating in a macroeconomic crisis. This simple insight produces an econometrically testable relationship between saving and investment. We use data for four countries, which belong to the Mercosur Common Trade Agreement: Argentina, Brazil, Paraguay and Uruguay. The results indicate that there is no long run relationship between saving and investment in these countries. Thus, Mercosur is likely to act as a palliative against such a possibility in the future.

Suggested Citation

  • Tapen Sinha & Dipendra Sinha, 1998. "Macroeconometric modeling of saving and investment for Mercosur countries," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 13(1), pages 57-72.
    • Handle: RePEc:emx:esteco:v:13:y:1998:i:1:p:57-72
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/241/243
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    Cited by:

    1. Sachsida, Adolfo & Caetano, Marcelo Abi-Ramia, 2000. "The Feldstein-Horioka puzzle revisited," Economics Letters, Elsevier, vol. 68(1), pages 85-88, July.

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