COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1776 A World Macro Saving Fact and an Explanation Ray C. Fair January 2011 The world macro saving fact concerns the total financial saving of the
world's private sector divided by world GDP. Relative to changes before 1994, there was a
huge fall in this ratio between 1995 and 2000, a huge increase between 2000 and 2003, a
huge fall between 2003 and 2006, and a huge increase between 2006 and 2009. This fact is
documented in this paper. The paper also shows that the fluctuations in this ratio are
highly correlated with fluctuations in world stock and housing prices. It thus appears
that much of the variation in the world private saving rate can be explained by forces
that affect world asset prices. Changes in these forces are for the most part
unpredictable, and so much of the change in the world private saving rate is
unpredictable. |
