The saving-investment relationship revisited: New evidence from multivariate heterogeneous panel cointegration analyses

This paper re-examines the relationship between national saving and investment using multivariate heterogeneous panel cointegration analyses of annual data for 126 countries during the period 1960 to 2000. We find a significant and robust positive association between the ratio of gross domestic investment to gross domestic product (GDP) and the ratio of gross domestic saving to GDP. In addition, we find a significantly lower saving-investment association for non-OECD countries relative to OECD countries.