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This paper traces movements of saving and investment in the Japanese economy over the four decades after World War II. The postwar decades may be divided conveniently into four periods: the reconstruction period (1945-1952) in which saving was in absolutely short supply; the normalization period (1952-1959) when the economy returned to normalcy; the rapid growth period (1960-1973) when saving and investment were balanced at a very high level so as to make rapid growth achievable; and the slow grown period (1974-present) in which saving exceeded investment in the private economy. This paper presents international comparisons between the Japanese economy and other industrializing Asian economies that have high savings rates. The paper then examines the individual sectors of the economy -- personal savings ratios, corporate saving and investment ratios, fiscal policy, and monetary policy. This paper then explains the transition of the Japanese economy from a neoclassical model economy to a Keynesian model economy. Finally, the paper concludes with the hope that the private sector will begin investing again, in order to prevent disequilibria in the government and external sectors.

Although monetary union created the conditions for improving economic and financial integration in the euro area, in the context of the financial and sovereign crises, it has also been accompanied by the emergence of severe imbalances in savings and investment, credit and housing booms in some countries and the allocation of resources towards less productive sectors. The global financial crisis and the euro area sovereign debt crisis then led to major and abrupt adjustments as the risks posed by the large imbalances materialised. Although the institutional shortcomings in the EU that permitted the emergence of imbalances have been largely addressed since 2008, the adjustment process is not yet complete. From a macroeconomic perspective, the imbalances in the external accounts have led to the accumulation of high levels of external liabilities that need to be reduced, which, in turn, is weakening investment and therefore weighing on growth prospects and growth potential. From a macroprudential perspective, the lingering imbalances have added to systemic risk and rendered the euro area more vulnerable to risks. This Occasional Paper analyses the dynamic patterns in macroeconomic imbalances primarily from the former perspective, addressing in particular the connections between macroeconomic and sectoral adjustments of imbalances and the challenges for economic growth and performance over a longer horizon. ; N/A

Several authors have shown that models with perfect international capital mobility can generate high correlations between aggregate savings and investment, as observed in the data. In this paper we decompose aggregate saving and investment into their two component parts, private and public. This leads to some striking observations. In almost all of the 15 OECD countries we investigate during the period 1975-1989, the private sector saving-investment gap closely mirrors the government sector saving-investment gap. Moreover, unlike the large aggregate saving investment correlations, private sector saving-investment correlations are on average close to zero. The paper investigates these and other moments associated with public and private saving and investment in the context of models with perfect capital mobility. The paper devotes significant attention to modeling the government sector. Rules for taxation, government consumption and investment are specified, estimated, and fed into the model simulations. We find that while models with fiscal, technology and interest rate shocks are able to generate negative correlations between the public and the private sector saving-investment gaps, these correlations still fall significantly short of the very negative correlations observed in the data. Moreover, the models are not able to generate correlations between private saving and investment that are much lower than those between total saving and investment. ; Published in connection with a visit at the IIES.

The emergence of large trade imbalances among the industrial countries during the 1980s-particularly the massive deficit of the United States and the surpluses of Germany and Japan-has led to growing disenchantment with the international economic system. But while many critics point to unfair trade practices as the cause of these imbalances, others contend that this emphasis is misplaced. In this provocative book by one of the nation's leading economists, Barry Bosworth argues that disparities are not the result of external infraction, but rather a reflection of domestic failures. He shows that the United States, for example, with its large government budget deficit and low rate of private saving, must borrow abroad to finance its investments. Similarly, trade surpluses of countries such as Japan reflect a surplus of national saving over domestic investment, rather than restrictive trade practices. Bosworth explains that large trade imbalances became possible in the 1980s because of the development of an international capital market that greatly reduced the barriers to borrowing and lending across national borders. The result is an international system in which national economies are closely linked through international capital markets as well as trade in goods and services. Using data from the major industrial countries, Bosworth highlights the process by which changes in domestic rates of saving and investment lead to changes in interest rates, exchange rates, and trade balances. He first examines why national saving and investment have fallen throughout the industrialized world. He then focuses on how exchange rates respond to trade imbalances, and considers whether the wide fluctuations in exchange rates are a cause for concern or simply an integral part of the international adjustment to the divergent patterns of national saving and

Intro -- Table Of Contents -- Preface -- Part One: How The Economy Works -- Chapter 1-The History Of Money -- Chapter 2-The American Experience With Money -- Chapter 3-The Federal Reserve System And How It Affects You -- Chapter 4-Measuring The Economy: Gross Domestic Product (GDP) And National Income And Product -- Chapter 5-Small Businesses And Corporations In The U.S. Economy -- Chapter 6-Strong Dollar, Weak Dollar: Foreign Exchange Rates And The U.S. Economy -- Chapter 7-What Determines Interest Rates? -- Chapter 8-Inflation And The Consumer Price Index (CPI) -- Part Two: Keys To Wealth Development -- Chapter 9-Financial Literacy And Capability -- Chapter 10-Develop A Financial Plan -- Chapter 11-Savings And Investing -- Chapter 12-Risk Tolerance -- Chapter 13-Advice For Investing Wisely -- Chapter 14-Defining Asset Allocation, Diversification, And Rebalancing -- Chapter 15-A Beginner's Guide To Financial Statements -- Chapter 16-Working With Financial Professionals -- Chapter 17-Understanding Securities Analyst Recommendations -- Chapter 18-How To Avoid The Most Common Investment Scams -- Chapter 19-Beware Of Online Perils And Internet Fraud -- Part Three: Banks And Bonds -- Chapter 20-Basic Facts About Banks And Banking -- Chapter 21-Internet And Tech-Based Banking Options -- Chapter 22-Pros And Cons Of Different Savings Options -- Chapter 23-Account Choices To Consider For Saving Money -- Chapter 24-A Guide To Deposit Insurance Coverage -- Chapter 25-What You Should Know About Certificates Of Deposit (CD) -- Chapter 26-What Are Bonds? -- Chapter 27-Understanding Savings Bonds -- Chapter 28-Treasury Bonds And Other Treasury Instruments -- Chapter 29-Municipal And Corporate Bonds -- Part Four: Stocks And Mutual Funds -- Chapter 30-Understanding Stocks -- Chapter 31-How The Stock Market Works -- Chapter 32-Types Of Investment Companies.