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U.S. Saving and Investment: Policy Implications

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  • Martin Schmidt

Abstract

Some economists have argued that the close association between domestic saving and investment rates justify polices aimed at altering domestic saving flows so as to influence domestic investment flows. This interpretation assumes an endogenous investment response. Equally likely, theoretically, is that the close association is maintained by movements in saving. The present paper explicitly examines the endogeneity of the U.S. saving and investment flows. Overall the results suggest that while the domestic saving rate responds endogenously, the domestic investment rate does not. This finding may limit the potential benefits of saving policies. Copyright Kluwer Academic Publishers 2003

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  • Martin Schmidt, 2003. "U.S. Saving and Investment: Policy Implications," Open Economies Review, Springer, vol. 14(4), pages 381-395, October.
    • Handle: RePEc:kap:openec:v:14:y:2003:i:4:p:381-395
    DOI: 10.1023/A:1025312810428
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    Cited by:

    1. Singh Tarlok, 2016. "International Mobility of Capital in the United States: Robust Evidence from Time-Series Tests," Journal of Time Series Econometrics, De Gruyter, vol. 8(2), pages 193-249, July.

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