SAVING AND INVESTMENT IN THE WORLD-ECONOMY AND ITALY PLACE

This essay discusses the proposition that the world economy will be confronted in the years to come with a global shortage of savings and high real interest rates. At a methodological level, it notes that the notion of saving scarcity can only make sense ex-ante and that in equilibrium high real interest rates imply that the productivity of capital is high. Empirically, the essay observes that investment demand is likely to remain weak in industrial countries for some time and that the large demand for capital by Eastern-European countries and CIS Republic may not translate in large flows of savings to the area. As a consequence, fears of an aggregate scarcity of savings may be exaggerated. However, Italy may have to live with hgh real interest rates owing to the disastrous state of its public finances and its weakening external position.