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Negative Interest Rates and Underlying Issues Induced by the Changing Volume of Global Excessive Savings (No.152, 2020)
2020-08-05
By Jia Shen, Research Department of Development Strategy and Regional Economy, DRC
Research Report, No.152, 2020 (Total 5896) 2020-6-19
Abstract: In recent years, many industrialized countries have witnessed the performance of negative interest rates. The direct reason lies in the fact that since the beginning of the 21st century, the scissors gap between the global savings rate and the global investment rate has become widened, and the global excessive savings keep a rising turn for quite some time. After 2008, the volume of global excessive savings has further increased due to the expenditure contraction of major capital recipient countries, the polarization between rich and poor in the world, and the mitigated capital shortfalls in low-income economies. Currently, both the global savings rate and the total excessive savings are at their highest levels in the past 50 years. In the future, the room for expenditure expansion of major deficit countries will be very limited, the industrialization level and capital self-sufficiency of developing countries will continue to rise high or become strengthened, and the issues of insufficient global demand and excessive savings will be there for a long time. We need to be fully prepared to meet the challenge of a long-term insufficient aggregate demand by expanding foreign trade and investment cooperation actively, innovating and improving the macro-control policy framework, and resolutely implementing the strategy of boosting domestic demand.
Keywords: excessive savings, negative interest rate, total demand, polarization of rich and poor
