Monday, February 13, 2012

Why Excess Of Savings Over Investments?

Tim Duy writes:

note the excess of private saving over private investment, which is exactly what you would expect if the market clearing interest rate was below the zero bound:

No, that what you would expect if you have a government budget deficit of over a trillion dollars that absorbs, or crowds out if you will, private savings as well as a lot of foreign savings.


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