What do the sensitivities of global savings and investment rates to the real interest rate tell us?

To understand the global economic equilibrium, it is important to know how sensitive savings and investment are to the real interest rate. These sensitivities contain the answers to important questions, for example: Will the increase in investment resulting from investment in the energy transition lead to a rise in interest rates (thereby crowding out other investments) or in savings? Can the decline in the real interest rate be explained by a rise ( ex ante ) in savings or a fall ( ex ante ) in investment? Our analysis is based on how global savings (equal to investment at equilibrium) and the global real interest rate respond to various shocks. We find that: The combined sensitivity of global savings and investment to the real interest rate is high; Savings are more sensitive than investment. Accordingly: The increase in investment for the energy transition will not drive up the equilibrium real interest rate much and will not push down other investment much; The decline in the global real interest rate can be attributed only partially to excess ( ex ante ) savings over investment.