Saving, Investment, and the Regional Current Account: An Analysis of Canadian, British, and German Regions

36 Pages Posted: 15 Feb 2006

See all articles by Alun H. Thomas

Alun H. Thomas

International Monetary Fund (IMF) - European Department

Date Written: August 1993

Abstract

The relationship between regional saving and investment is examined to measure the extent of capital mobility. The relationship between total regional saving and investment is significantly negative in Canada and the United Kingdom, in contrast to the significant positive relationship found across countries. The difference is attributed to government subsidies to poor regions. The relationship between personal saving and private investment is insignificant in the U.K. and Germany and is negative in Canada which suggests that capital is mobile for individuals. The relationship between retained earnings and private investment is significantly positive in the U.K. and Canada suggesting capital immobility for firms but a test for the presence of regional corporate liquidity constraints yields no effects.

JEL Classification: F20

Suggested Citation

Thomas, Alun, Saving, Investment, and the Regional Current Account: An Analysis of Canadian, British, and German Regions (August 1993). IMF Working Paper No. 93/62, Available at SSRN: https://ssrn.com/abstract=883539

Alun Thomas (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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