TY  - JOUR
AU  - Dooley,Michael P.
AU  - Folkerts-Landau,David
AU  - Garber,Peter M.
TI  - Savings Gluts and Interest Rates: The Missing Link to Europe
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11520
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11520
L1  - http://www.nber.org/papers/w11520.pdf
N1  - Author contact info:
Michael P. Dooley
Department of Economics
Engineering II
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459 3662
Fax: 831/459-5077
E-Mail: MPD@UCSC.EDU

David Folkerts-Landau
Deutsche Bank
Deutsche Bank AG London
1 Great Winchester Street
London EC2 2EQ
United Kingdom
E-Mail: david.folkerts-landau@db.com

Peter M. Garber
Deutsche Bank
60 Wall Street
New York, NY 10005
Tel: 212/250-5466
Fax: 212/250-2628
E-Mail: peter.garber@db.com
AB  - Data for world savings rates do not suggest that an aggregate glut of world savings has depressed US and international interest rates in recent years.  Unusual but offsetting changes in savings rates have been limited to three regions: sharp declines in the US have been matched by sharp increases for developing Asia and the Middle East.  The world saving rate has increased very little.  There are two important features of this change in regional savings behavior.  First, three-quarters of the increase in Asian and Middle Eastern savings has been placed in international reserves.  Second, all these additional savings have been absorbed by the United States.  Even if reserves are mostly placed initially in the US, we would not expect all the savings exported from these high savings regions to remain in the United States.  A collapse of expected profits outside the US seems to us a compelling explanation for the US current account deficit and depressed international interest rates.
ER  -