The finance-investment-savings-funding circuit in open economias

Vol. 28 No. 1 (2008)

Jan-Mar / 2008
Published January 1, 2008
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Resende, Marco Flávio da Cunha. 2008. “The Finance-Investment-Savings-Funding Circuit in Open Economias”. Brazilian Journal of Political Economy 28 (1):136-54.

The finance-investment-savings-funding circuit in open economias

Marco Flávio da Cunha Resende
Centro de Desenvolvimento e Planejamento Regional da Universidade Federal de Minas Gerais
Brazilian Journal of Political Economy, Vol. 28 No. 1 (2008), Jan-Mar / 2008, Pages 136-154


On monetary economies the Finance-Investment-Savings-Funding circuit (F-I-S-F) prevails. Investment precedes savings. This circuit was worked out for a closed economy. This study seeks to demonstrate that the circuit F-I-S-F also prevails for open economies. A second point studied in this paper relates the relationship between budget deficits and savings restriction for investment. Conclusions highlight that the circuit F-I-S-F prevails for open economies and that budget deficits do not cause savings restriction for investment. In some situations budget déficits transfer the effects of investment for national savings formation from domestic economy to the rest of the world.

JEL Classification: E12, E21, E62, F41.

Keywords: Finance-Investment-Savings-Funding open economy national saving