American Economic Review Vol. 115 No. 1 2025

The Global Financial Resource Curse

Gianluca Benigno¹; Luca Fornaro²; Martin Wolf³

¹ HEC Lausanne and CEPR (email: ) · ² CREI, Universitat Pompeu Fabra, Barcelona School of Economics and CEPR (email: ) · ³ University of St Gallen and CEPR (email: )

Abstract

We provide a model connecting the global saving glut to productivity growth. The key feature is that the tradable sector is the engine of growth of the economy. Capital flows from developing countries to the United States boost demand for US nontradable goods, inducing a reallocation of US economic activity from the tradable sector to the nontradable one. In turn, lower profits in the tradable sector lead firms to cut back investment in innovation. Since innovation in the United States determines the evolution of the world technological frontier, the result is a drop in global productivity growth.

DOI

10.1257/aer.20211792

Volume

115

Issue

1

Pages

220-262

Language

en

Sources

bibtex:phds-export.bib crossref openalex

Cite

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