The 1980's have seen a massive decrease in world saving-, and thus in aggregate world investment. Behind that fact is a variegated pattern: there has been a huge structural decrease in public saving, especially in the United States - an important case because of its large scale - and also, on a smaller scale, in Italy and a few countries in Scandinavia. Most of the deficits elsewhere are cyclical, not structural. (But whether structural or cyclical there has resulted' a huge increase in public debt.) Further, there has been no offsetting increase of private saving, despite a rise of the world real interest rate. There has been a cyclical fall of private saving.
What are the consequences of this pattern? What are the benefits and costs for America? For Europe and the others? Ought Europe to imitate America's fiscal policy? These are the questions confronting us. Here I can only throw out some ideas, and express the hope and expectation that many other insights will emerge from the regular papers that lie in store for us at this conference.
