Fiscal deficits in OECD countries and excess private savings over investment

In OECD countries, the fiscal deficit is clearly linked to excess private savings over investment. We first seek to determine what has given rise to excess private savings over investment since 2008, and prior to the COVID crisis. It is due to the emergence of excess corporate savings and a decline in housing investment and public investment, not in household savings or corporate investment. We then seek to determine whether the fiscal deficit is the appropriate response to the excess private savings over investment , given the origin of this excess. We see that the fiscal deficit is explained by welfare transfers to households and corporate tax cuts. We then believe that this fiscal deficit is unsuitable for the nature of the excess private savings: it does not correct companies' excess savings (on the contrary in fact ) and the shortfall in public investment.