The global side of the investment-saving puzzle

Joseph P. Byrne, Glorgio Fazio, Norbert Fiess

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)


In this paper, we reexamine the long-standing and puzzling correlation between national saving and investment in industrial countries. We apply an econometric methodology that allows us to separate idiosyncratic correlation at the country level from correlation at the global level. In a major break with the existing literature, we find no evidence of a long-run relationship in the idiosyncratic components of saving and investment. We also find that the global components in saving and investments commove, indicating that they react to shocks of a global nature.

Original languageEnglish
Pages (from-to)1033-1040
Number of pages8
JournalJournal of Money, Credit and Banking
Issue number5
Early online date16 Jul 2009
Publication statusPublished - 31 Aug 2009


  • Feldstein-Horioka puzzle
  • investment
  • panel nonstationarity
  • principal components
  • saving


Dive into the research topics of 'The global side of the investment-saving puzzle'. Together they form a unique fingerprint.

Cite this