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SavingsWedge, Productivity Growth, and International Capital Flows

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  • Hung, Ly Dai

    (Vietnam Central Economic Commission, Hanoi, Vietnam & Thang Long Institute of Mathematics and Applied Sciences (TIMAS), Hanoi, Vietnam)

Abstract

The empirical evidence derived from an analysis of a panel sample of 162 economies for the 1980-2013 period demonstrates that a higher productivity growth rate is associated with greater savings. The savings wedge, a type of financial friction, underlies this correlation.T he growth rate has a positive influence on investment.S ince net capital inflows represent a gap between domestic investment and savings, their fluctuation over time is driven by the dynamics of productivity growth.T he evidence also implies that the neoclassical growth model works on the investment side while the allocation puzzle still applies on the savings side of the net capital inflows equation.

Suggested Citation

  • Hung, Ly Dai, 2020. "SavingsWedge, Productivity Growth, and International Capital Flows," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 35(3), pages 503-518.
    • Handle: RePEc:ris:integr:0808
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    Cited by:

    1. Saifullah Khan & Adnan Shoaib, 2024. "Firm value adjustment speed through financial friction in the presence of earnings management and productivity growth: evidence from emerging economies," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

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    More about this item

    Keywords

    International Capital Flows; Financial Friction; Productivity Growth; Savings Wedge;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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