TY  - JOUR
AU  - Engel,Charles
AU  - Kletzer,Kenneth
TI  - Saving and Investment in an Open Economy with Non-Traded Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2141
PY  - 1987
Y2  - 1987
UR  - http://www.nber.org/papers/w2141
L1  - http://www.nber.org/papers/w2141.pdf
N1  - Author contact info:
Charles Engel
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI  53706-1393
Tel: 608/262-3697
Fax: 608/262-2033
E-Mail: cengel@ssc.wisc.edu

Kenneth Kletzer
University of California, Santa Cruz
Department of Economics
217 Social Sciences 1
Santa Cruz, CA  95064
Tel: 408-459-3407
E-Mail: kkletzer@cats.ucsc.edu
AB  - We examine a model of a small open economy in which there is free international mobility of financial capital, investment in capital goods and a non-traded good. Such an environment is rich enough to explain several phenomena that are inexplicable in more barren models. We suggest an explanation of why saving and investment may be correlated even with no restrictions on trade in assets. We explain why a high saving country may nonetheless borrow from abroad to finance investment. We also provide an optimizing model of stages in the balance of payments.
ER  -