Saving and investment throughout the world
Retrieve the most recent World Economic Outlook (WEO) from the website of the International Monetary Fund (www.imf.org). In the Statistical Appendix, find the table titled ‘Summary of Net Lending and Borrowing’, which lists saving and investment (as a percentage of GDP) around the world. Use the data for the most recent year available to answer parts (a) and (b).
a. Does world saving equal investment? (You may ignore small statistical discrepancies.) Offer some intuition for your answer.
b. How does US saving compare to US investment? How is the United States able to finance its investment? (We explain this explicitly in the next chapter, but your intuition should help you figure it out now.)
c. From the FRED economic database download real GDP (variable GDPC1) and real GNP (variable GNPC96) for the years 1947 to the latest data. Calculate the percentage difference between GNP and GDP in the United States. Which is larger? Why is that the case?
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