Neoclassical economic models are based on the assumption that investment is financed from household savings.  Accordingly, capital accumulation will be maximized by policies aimed at increasing household savings rates and capital imports (“foreign savings”).  These models also predict that capital should flow from rich to poor countries, attracted by higher rates of return. However, facts […]

It is sad and surprising that among the deluge of comments and letters on Greece in the European papers in the last few weeks, not one has gotten the most crucial point about the crisis.  Most commentators treat Greece’s domestic problems and those of other southern members of the European Monetary Union (EMU) as if […]