Template-type: ReDif-Paper 1.0
Author-Name: Meijers, Huub 
Author-workplace-name: UNU-MERIT
Author-Name: Muysken, Joan 
Author-Name: Sleijpen, Olaf
Title: Firms' excess savings and the Dutch current account surplus: a stock-flow consistent
	 approach
Abstract: In the Netherlands firms' savings, i.e. retained profits, exceed investment at a
	 national level. The resulting net savings are mainly held abroad. Moreover, there is a
	 striking resemblance in the development of net savings of firms' on the one hand and the
	 surplus on the current account on the balance of payments on the other. Both have
	 increased to almost 10% of GDP in recent years. Next to that, the housing boom household
	 net-savings have decreased prior to 2007 following the housing boom, accompanied by an
	 increase in government net-savings. These trends reversed thereafter due to the bursting
	 of the housing bubble.
	 We present a stock-flow consistent model of the firm to explain firms' excess savings,
	 inspired by Hein (2012), and embed that in an open economy model with a banking sector
	 which we have developed earlier. This enables us to model the preference of firms to
	 invest in financial assets abroad and to analyse the close link between firms' excess
	 savings and the current account surplus. As a consequence we also explain the close link
	 between net household savings and government budget deficit. We present simulation
	 results to illustrate the working of our model.  
Keywords: stock-flow consistent modelling, retained profits, current account surplus  
Classification-JEL: E44, E60, F45, G32
Series: UNU-MERIT Working Papers
Creation-Date: 2015
Number: 2015-040
File-URL: https://unu-merit.nl/publications/wppdf/2015/wp2015-040.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2015040