Economics

A country's savings and investment move in near lockstep, even though they shouldn't

If capital truly moved freely across borders, a nation's savings rate and its investment rate should barely track each other — money would just chase the highest returns anywhere on Earth. In 1980, Martin Feldstein and Charles Horioka found the opposite across country after country, suggesting capital is far less internationally mobile than standard trade theory assumes.

Martin Feldstein and Charles Horioka, Domestic Saving and International Capital Flows — The Economic Journal, 1980

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