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The private and public savings gaps in Malta and their impact on the current account

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  • Grech, Aaron George

Abstract

Any difference that arises between the level of domestic saving and investment is reflected in the nation's current account position. Both domestic saving and investment can be sub-divided into private and public sector components, and gaps between these two variables can be easily computed. This paper analyses the relationship between the private and public saving gaps in Malta during the 1970-1997 period and then proceeds to discern their respective impact on the current account position. In particular, it finds that the deterioration in the current account in the 1990�s was the result of higher government net borrowing, and that there was no statistically significant relationship between the private and public saving gap during the period. Given that in the coming decades economic restructuring and the ageing of the population will probably lead to higher investment and a drop in saving, the article concludes that public finances must be strengthened significantly if a further deterioration in the country�s external imbalance is to be prevented.

Suggested Citation

  • Grech, Aaron George, 2000. "The private and public savings gaps in Malta and their impact on the current account," MPRA Paper 33208, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33208
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    File URL: https://mpra.ub.uni-muenchen.de/33208/1/MPRA_paper_33208.pdf
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    References listed on IDEAS

    as
    1. Mr. Hamid Faruqee & Guy Debelle, 1996. "What Determines the Current Account? a Cross-Sectional and Panel Approach," IMF Working Papers 1996/058, International Monetary Fund.
    2. Grech, Aaron George, 1999. "Funded pension schemes: Economic effects and policy implications," MPRA Paper 33615, University Library of Munich, Germany.
    3. Mr. Fabio Scacciavillani & Mr. Malcolm D. Knight, 1998. "Current Accounts: What Is Their Relevance for Economic Policymaking?," IMF Working Papers 1998/071, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

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    as


    Cited by:

    1. Aaron G Grech & Noel Rapa, "undated". "Trends in Malta’s current account and their underlying causes," CBM Policy Papers PP/03/2016, Central Bank of Malta.
    2. William Gatt, "undated". "The determinants of household saving behaviour in Malta," CBM Working Papers WP/03/2014, Central Bank of Malta.
    3. Aaron G Grech, "undated". "The evolution of the Maltese economy since independence," CBM Working Papers WP/05/2015, Central Bank of Malta.
    4. Aaron G. Grech (ed.), 2015. "The evolution of the Maltese Economy since Independence," CBM Ebooks, Central Bank of Malta, edition 1, number 02.

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    More about this item

    Keywords

    current account sustainability; fiscal policies and the behaviour of economic agents; saving and investment trends;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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