The Global Rise of Corporate Saving / Peter Chen, Loukas Karabarbounis, Brent Neiman.

Format:

Book

Author/Creator:

Chen, Peter.

Contributor:

National Bureau of Economic Research.

Karabarbounis, Loukas.

Neiman, Brent.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23133.

NBER working paper series no. w23133

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

The sectoral composition of global saving changed dramatically during the last three decades. Whereas in the early 1980s most of global investment was funded by household saving, nowadays nearly two-thirds of global investment is funded by corporate saving. This shift in the sectoral composition of saving was not accompanied by changes in the sectoral composition of investment, implying an improvement in the corporate net lending position. We characterize the behavior of corporate saving using both national income accounts and firm-level data and clarify its relationship with the global decline in labor share, the accumulation of corporate cash stocks, and the greater propensity for equity buybacks. We develop a general equilibrium model with product and capital market imperfections to explore quantitatively the determination of the flow of funds across sectors. Changes including declines in the real interest rate, the price of investment, and corporate income taxes generate increases in corporate profits and shifts in the supply of sectoral saving that are of similar magnitude to those observed in the data.

Notes:

Print version record

February 2017.