Optimal Saving, Interest Rates, and Endogenous Growth
1993 (English)Report (Other academic)
The main point of this paper is that the apparent failure of economists thus far to establish a positive empirical link between interest rates and saving does not, by itself, discredit the hypothesis of a direct structural relationship between the two, ceteris paribus, because this structural relationship may be shifting about in response to changes in exogenous variables such as tastes and technology in a way that is consistent with any type of reduced-form correlation between interest rates and saving in the data. This point is demonstrated within a simple model of optimal saving, interest rates, and economic growth. The different implications of endogenous versus exogenous growth are explored in this context.
Place, publisher, year, edition, pages
Stockholm: IIES , 1993. , 38 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 539
IdentifiersURN: urn:nbn:se:su:diva-41858OAI: oai:DiVA.org:su-41858DiVA: diva2:338005