1 option
Should Latin America Save More to Grow Faster? / de la Torre, Augusto.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- de la Torre, Augusto
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to finance.
- Currencies and exchange rates.
- Current account deficits.
- Debt markets.
- Economic theory & research.
- Emerging markets.
- Exchange rate appreciation or depreciation.
- Finance and financial sector development.
- Growth.
- Macroeconomics and economic growth.
- Private sector development.
- Real exchange rate determination.
- Saving.
- Sovereign risk premium.
- Local Subjects:
- Access to finance.
- Currencies and exchange rates.
- Current account deficits.
- Debt markets.
- Economic theory & research.
- Emerging markets.
- Exchange rate appreciation or depreciation.
- Finance and financial sector development.
- Growth.
- Macroeconomics and economic growth.
- Private sector development.
- Real exchange rate determination.
- Saving.
- Sovereign risk premium.
- Physical Description:
- 1 online resource (63 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2015.
- System Details:
- data file
- Summary:
- Latin America's historically low saving rates and sub-par growth performance raise the question of whether the region should save more to grow faster. Economists generally resist acknowledging a policy-exploitable causal connection going from saving to growth because domestic saving is perceived to be fully endogenous, optimally determined, or fully substitutable by foreign saving. However, to the extent that these three assumptions do not hold, three channels can be established through which higher domestic saving-by curbing persistent current account deficits-can promote medium-term growth. The channels are first, a real interest rate channel, whereby higher saving reduces the cost of capital and enhances macro sustainability; second, a real exchange rate channel, through which higher saving leads to a more competitive real exchange rate; and third, an endogenous saving channel, whereby saving follows growth and, hence, subsequently compounds the effect of the first two channels. Econometric evidence supports all three channels and suggests that the lower-saving countries in Latin America and the Caribbean, especially those with recurrently weak balance of payments and persistent domestic demand pressures on the non-tradable sector, would benefit the most from boosting their saving rates.
The Penn Libraries is committed to describing library materials using current, accurate, and responsible language. If you discover outdated or inaccurate language, please fill out this feedback form to report it and suggest alternative language.