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Date: | Fri Mar 31 17:18:37 2006 |
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This seems to me evidence that I drives S rather than the reverse. In a
set of economies linked
by a world market in lending and borrowing, an increase in saving would
lead to a decrease in net foreign borrowing with investment unchanged at
the unchanged or slightly lower world interest rate. An increase in
investment on the other hand would be associated with more saving through
the good old Keynesian channels: more I leads to more Y leads to more S.
Am I missing something? So if Feldstein finds an association between
domestic S and I, haven't we got evidence of a sort for the Keynesian view?
Talk about saving the hypothesis, though: Feldstein says, doesn't he,
that this is evidence that markets in lending and borrowing aren't as
open as they appear! Yeah, if the classical take on the S/I link is a
maintained assumption! But then it can't be a result. Here's where we
need DH Robertson: not for his classical stridency, but for the wonderful
Alice-in-Wonderland quotes that he put in everything he wrote!
On Thu, 20 Jul 1995 [log in to unmask] wrote:
> Has anybody read Martin Feldstein's essay, "Global capital Flows"? It
appeared
> in the June 24th, 1995 edition of the Economist. One of the points made
in the
> essay is that there is a strong relationship between national savings and
> investment. For OECD countries, between 1970 and 1992, "about two-thirds
of
> each additional dollar of sustained saving remains at home to finance
> additional domestic investment." Feldstein argues that the relationship
is
> robust to changes in the sample of time and of countries.
>
> Feldstein uses this relationship to argue that capital markets are highly
> segmented. Consequently, it is important that countries develop policies
to
> increase national savings. Mexico's recent problems are an example of
> what happens when this does not occur.
>
>
>
>
>
> Stuart M. Glosser
> Dept. of Economics
> University of Wisconsin at Whitewater
> [log in to unmask]
> (414) 472-5580
> (414) 472-1361
>
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