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Stock Market Wealth, Private Saving, and the Current Account in the United States: Should We Worry?

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  • Strauß, Hubert M.

Abstract

The paper investigates by means of cointegration analysis whether the recently observed low levels of private saving and the current account balance in the United States are worrisome in the sense that they cannot be sufficiently explained by determinants which performed well in the past. Stock market wealth of private households is taken into account and turns out to be the main dampening factor of private saving during the nineties. Unlike the current account deficit, which reflects low saving, higher growth with respect to the rest of the world and the high dollar, private saving is much lower than predicted by the model in 1999.

Suggested Citation

  • Strauß, Hubert M., 1999. "Stock Market Wealth, Private Saving, and the Current Account in the United States: Should We Worry?," Kiel Working Papers 963, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:963
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Private Saving; Current Account Balance; Stock Market Wealth; Cointegration;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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