Corporate Saving and Investment： Recent Trends and

OECDECONOMICOUTLOOK82PRELIMINARYEDITIONCHAPTER3CORPORATESAVINGANDINVESTMENT:RECENTTRENDSANDPROSPECTSIntroductionandsummaryofthemainresultsSince2001,OECDcorporatenetlendinghasrisensharplyFortheaggregateOECDcorporatesector,theexcessofgrosssavingoverfixedinvestment(i.e.netlending)hasbeenunusuallylargesince2002,evenallowingfortherecentfall(Figure3.1).Indeed,whileattentionhasincreasinglyfocussedontheemergenceofglobalfinancialimbalancesandapossibleglobal“savingglut”,1aggregateOECDcorporatenetlendingroseslightlymoreover2001-05thantheaggregateexternalsurplusoftheAsapercentageofGDP,incurrentdollarsFigure3.1.OECDcorporatenetlending1-4-3-2-101237891011121314Corporategrossfixedcapitalformation(rightscale)Corporategrosssaving(rightscale)Corporatenetlending(leftscale)1991929394959697989920000102030405062ForJapanandDenmarkindcapitaltransfers.ThesecanSource:OECDAnnualNationalAccounts,nationalsourcesandOECDcalculations.1.AggregatesincludeAustralia,Canada,Denmark,Finland,France,Germany,Italy,Japan,Netherlands,UnitedKingdomandUnitedStates.2006,estimatesbasedonEconomicOutlook82database.2.Netlendingisnotequaltothedifferencebetweengrosssavingandgrossfixedcapitalformation.Itisalsoaffectedbychangesininventoriesanbeimportant,asforGermanyin1995andJapanin1998.1.SeeBernanke(2005).1OECDECONOMICOUTLOOK82PRELIMINARYEDITIONemergingmarketeconomies(2%ofOECDGDPagainst1½percentofOECDGDP)(Figure3.2).2Totheextentthehouseholdsectordoesnotfully“piercethecorporateveil”,theriseincorporatesavingthathasdriventherun-upinnetlendingwillhavecontributedtolowglobalinterestrates.3Figure3.2.Changeinnetlending:aglobalperspectiveVariationbetween2001and2005inbillionsofdollarsSource:OECDEconomicOutlook82databaseandOECDAnnualNationalAccounts.-800-600-400-2000200400600800OECDCorporatesOECDHouseholdsOECDGovernmentsNon-OECDAroughandreadydecompositionsuggests…Againstthisbackgroundthischapterexaminesvariousfacetsofcorporatenetlendingwithaviewtounderstandingsomeofthemainforcesatplaybehindtherecentrun-upandprovidingsomeinsightintowhetherandhowtheymightpossiblyunwindinthefuture,aprocessthatmayalreadybeunderway.Tothisend,itattemptstoidentifycyclical,othertransitoryandtrendinfluencesoncorporatenetlending,distinguishing,insuccessivesections,betweenthosephenomenawhichappearcommonacrossmostOECDcountries,andthosewhichappearmorecountry-specific.Anattemptismadetokeepacruderunningscore-cardofthesetransitoryandmorelonglastingcontributions(Table3.1).Thefocusofthechapterisonthesevenmajoreconomies,whichhavemadealargecontributiontotheincreaseintotalOECDcorporatenetlending,butothercountryexperiencesarealsomentioned.China,wherecorporatenetlendinghasalsoincreasedsharplyovertherecentpastiscoveredseparatelyinBox3.1.Themainfindingsofthechapterare:…thattheincreaseispartlytemporary…•Nomorethanhalfoftheincreaseincorporatenetlendingovertheperiod2001to2005islikelytobepersistent(Table3.1).2.Detailedinformationoncorporateaccountsisnotyetavailablefor2006forsomecountries,notablyJapan.Inmostothercasesitbecameavailableonlyrecentlyandcouldnotbeusedfortheeconometricanalysis.Thereforethischapterfocusesonthe2001-2005period,notablyasconcernsOECDaggregates.Whereavailable,thedatafor2006isincludedinindividualcountrycharts.3.Totheextentrisingcorporatesavinghasbeenadriverofthefallinhouseholdsavingsrates,andprovidedhighcorporatesavingisexpectedtopersist,thiswouldprovidegreaterconfidenceinthesustainabilityofwhatotherwiseappeartobeunusuallylowhouseholdsavingratesinmanyOECDcountries.2OECDECONOMICOUTLOOK82PRELIMINARYEDITION…withsomeofitlikelytofadewiththecycleand…•Afactorcontributingtotherecentbuoyancyinnetlendinghasbeenthesimultaneouspick-upacrossbothfinancialandnon-financialsectorsinmanycountries,whereasinthepastsuchmovementshavetypicallybeenpoorlycorrelated.Highnetlendinginthenon-financialsectorhasbeenpartlydrivenbythecyclicaldownturnsince2001;withoutputgapscontinuingtocloseafter2005thistransitoryeffectisfading.Table3.1.ContributionstoincreaseOECDcorporatenetlendingoverperiod2001-05PercentagepointsofGDPMagnitudeofef(%ofOECDGDTOTAL2.0ContributionbycountryUnitedStates0.6Japan0.8Germany0.3UnitedKingdom0.4Others-0.1Contributionbymacroeconomiceffects1Effectofbusinesscycle0.5Effectoffinancialvariables0.6ContributionbysectortooperatingsurplusContributionoffinancialsector0.4Contributionofhousing-relatedsectorfectTransitoryP)orlong-lastingeffectSomepartialreversallikelyUnclear,morelikelytofallLikelytopersistSomepartialreversallikelyTransitoryProbablymostlytransitoryProbablymostlytransitory20.3Totaloperatingsurplus1.1ContributionbyaccountingconceptEffectsthroughhighercorporatesavingEffectoflowerinterestpayments0.8Effectofincreasedpropertyincome0.7Effectoflowerinflation0.1Totalfromhighercorporategrosssaving1.2EffectsthroughlowercorporateinvestmentLowerinvestmentgoodsrelativeprices0.5Totalthroughlowercorporateinvestment0.9Notes:Theresultsarederivedfromdifferentanalyses,whicharenotmindividualeffectscannotbemeaningfullysummed.1.Fordetails,seeAndréetal.(2007).2.ThecontributionoftheconstructionsectorandrealestatesservicesSource: