. Clarification of this point necessitates a study of the relationship between consumption, savings, and equity within the framework …

intermediaries or sold in a pool with low quality assets. Savings gluts diminish origination incentives because they compress the … borrowing constraints, which results in higher leverage. Thus savings gluts generate financial fragility - the sensitivity of …

Capital outflows after financial integration can lead to simultaneous increases in the national savings rate and asset … constraint that creates a need for precautionary savings. Financial integration provides firms with access to foreign risk … capital outflows; and a wealth effect, whereby they grow richer in equilibrium and thus demand more domestic capital. Savings …