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Saving, Investment, and the Regional Current Account: An Analysis of Canadian, British, and German Regions

Author

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  • Mr. Alun H. Thomas

Abstract

The relationship between regional saving and investment is examined to measure the extent of capital mobility. The relationship between total regional saving and investment is significantly negative in Canada and the United Kingdom, in contrast to the significant positive relationship found across countries. The difference is attributed to government subsidies to poor regions. The relationship between personal saving and private investment is insignificant in the U.K. and Germany and is negative in Canada which suggests that capital is mobile for individuals. The relationship between retained earnings and private investment is significantly positive in the U.K. and Canada suggesting capital immobility for firms but a test for the presence of regional corporate liquidity constraints yields no effects.

Suggested Citation

  • Mr. Alun H. Thomas, 1993. "Saving, Investment, and the Regional Current Account: An Analysis of Canadian, British, and German Regions," IMF Working Papers 1993/062, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1993/062
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    Citations

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    Cited by:

    1. Wei, Shang-Jin & Boyreau-Debray, Genevieve, 2004. "Pitfalls of a State-Dominated Financial System: The Case of China," CEPR Discussion Papers 4471, C.E.P.R. Discussion Papers.
    2. Attila Csajbók (ed.) & Ágnes Csermely (ed.), 2002. "Adopting the euro in Hungary: expected costs, benefits and timing," MNB Occasional Papers 2002/24, Magyar Nemzeti Bank (Central Bank of Hungary).
    3. Boyreau-Debray, Genevieve, 2003. "Financial intermediation and growth - Chinese style," Policy Research Working Paper Series 3027, The World Bank.
    4. Li Qi, 2010. "Capital flows and domestic market integration in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 8(1), pages 67-94.
    5. Chan, Kenneth S. & Dang, Vinh Q.T. & Lai, Jennifer T. & Yan, Isabel K.M., 2011. "Regional capital mobility in China: 1978–2006," Journal of International Money and Finance, Elsevier, vol. 30(7), pages 1506-1515.
    6. Jérome Hericourt & Mathilde Maurel, 2006. "A new look at the Feldstein-Horioka puzzle: a European-regional perspective," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 49(2), pages 147-168.
    7. Mingming Jiang, 2014. "Saving–investment Association and Regional Capital Mobility in China: A Nonparametric Panel Approach," Pacific Economic Review, Wiley Blackwell, vol. 19(2), pages 184-200, May.
    8. Kenneth Chan & Jennifer Lai & Isabel Yan, 2013. "Special Issue. Guest Editor: Zhihao Yu," Review of Development Economics, Wiley Blackwell, vol. 17(3), pages 430-446, August.
    9. Ginama, Isamu & Hayakawa, Kazuhiko & Kanmei, Takahiro, 2018. "Examining the Feldstein–Horioka puzzle using common factor panels and interval estimation," Japan and the World Economy, Elsevier, vol. 48(C), pages 11-21.
    10. Saileshsingh Gunessee & Cheng Zhang, 2022. "The economics of domestic market integration," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1069-1095, September.
    11. Jean Pisani-Ferry, 1994. "Union monétaire et convergence : qu'avons nous appris ?," Working Papers 1994-14, CEPII research center.
    12. Decressin, Jörg & Disyatat, Piti, 2008. "Productivity shocks and the current account: An alternative perspective of capital market integration," Journal of International Money and Finance, Elsevier, vol. 27(6), pages 897-914, October.
    13. Smith, Constance E., 2011. "External balance adjustment: An intra-national and international comparison," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 1195-1213, October.

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