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The personal savings rate in Asian countries is often much higher than in Europe or...

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Finance

The personal savings rate in Asian countries is often much higher than in Europe or the U.S. For instance, the personal savings rate in the U.S. is around 5%, while the same rate in China is around 30%. What impact will this have on the growth of capital stock in the U.S. vs. China?

In the above question, suppose that savers in China decide to put a significant portion of their savings into financial instruments in the U.S. For example, suppose they decide to buy U.S. government bonds and the bonds of U.S. companies in order to invest their savings. How would that affect the growth of capital stock in the U.S. relative to China?

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