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Is Global Economic Stability or Instability Still Possible ?


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1 Associate Professor of Economics, Achhruram Memorial College, Sidho-Kanho-Birsha University, Jhalda, Purulia, West Bengal-723 202, India

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In the era of globalization, the export-import of savings and investments has also been globalized. The saving-investment gap or excess saving over investment has a dual role in creating internal and external economic instability. While, for example, positive excess saving over investment creates an internal economic recession, on the other hand, it creates favorable balance of current account. Paradox of thrift (or the effects of excess savings over investment) is equally applicable to both the national economy and global economy. Owing to saving-investment inequality both at the national and global level, the achievement of the optimal level of internal and/or external economic status of all the countries is not possible simultaneously in the globalized world.

Keywords

Saving, Investment, Internal, External, Balance

E12, E21, E60

Paper Submission Date : June 19, 2015 ; Paper sent back for Revision : January 6, 2016 ; Paper Acceptance Date : April 8, 2016.

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  • Is Global Economic Stability or Instability Still Possible ?

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Authors

Arup Kanti Konar
Associate Professor of Economics, Achhruram Memorial College, Sidho-Kanho-Birsha University, Jhalda, Purulia, West Bengal-723 202, India

Abstract


In the era of globalization, the export-import of savings and investments has also been globalized. The saving-investment gap or excess saving over investment has a dual role in creating internal and external economic instability. While, for example, positive excess saving over investment creates an internal economic recession, on the other hand, it creates favorable balance of current account. Paradox of thrift (or the effects of excess savings over investment) is equally applicable to both the national economy and global economy. Owing to saving-investment inequality both at the national and global level, the achievement of the optimal level of internal and/or external economic status of all the countries is not possible simultaneously in the globalized world.

Keywords


Saving, Investment, Internal, External, Balance

E12, E21, E60

Paper Submission Date : June 19, 2015 ; Paper sent back for Revision : January 6, 2016 ; Paper Acceptance Date : April 8, 2016.




DOI: https://doi.org/10.17010/aijer%2F2016%2Fv5i3%2F95415