Archive for November, 2007

Through the Looking Glass: Saving Glut or Demand Shortage

Wednesday, November 7th, 2007

The old saying is that “If you only have a hammer everything looks like a nail”. For economists, the hammer is “saving” and a host of problems are reduced to questions of saving. Nowhere is this clearer than discussions of the U.S. trade deficit and global financial imbalances, which are often explained as a saving problem. Unfortunately, this focus on saving distorts understanding and distracts from the real challenge of creating mass consumption markets in developing countries. (more…)