ABSTRACT
The major puzzle of the world economy in the last 40 years is the growing discrepancy between the development of the world savings rate and the development of interest rates. While the rate of savings and investment had risen from the beginning of the 1960s to the middle of the 1970s, it fell, after the first oil price explosion, back to the level of the early 1960s and did not recover thereafter. World interest rates, short and long term, were low up until the middle of the 1970s but both rose sharply since the beginning of the 1980s and, up to our days, never returned to levels that had been regarded as ‘normal’ in the first decades after World War II.
