International Analysis of Savings

In this paper we explore the relationship between the public and private savings components of national savings (the ultrarational hypothesis) and between the households and the corporate sector components of private savings (the consolidation effect). We apply pooled cross-section analysis for testing the presence of a unit root in the net savings magnitudes in European Union countries. The empirical evidence suggests no support for the ultrarational hypothesis within the EU. The EU private sector net savings rates show evidence to support the consolidation hypothesis suggesting that private sector constituents act in unison in terms of saving decisions.