Firms' excess savings and the Dutch current account surplus: a stock‐flow consistent approach

H.H.M. Meijers, J. Muysken, O.C.H.M. Sleijpen

Research output: Working paper / PreprintWorking paper


In the Netherlands firms' savings, i.e. retained profits, exceed investment at a national level. The resulting net savings are mainly held abroad. Moreover, there is a striking resemblance in the development of net savings of firms' on the one hand and the surplus on the current account on the balance of payments on the other. Both have increased to almost 10% of GDP in recent years. Next to that, the housing boom household net-savings have decreased prior to 2007 following the housing boom, accompanied by an increase in government net-savings. These trends reversed thereafter due to the bursting of the housing bubble.

We present a stock-flow consistent model of the firm to explain firms' excess savings, inspired by Hein (2012), and embed that in an open economy model with a banking sector which we have developed earlier. This enables us to model the preference of firms to invest in financial assets abroad and to analyse the close link between firms' excess savings and the current account surplus. As a consequence we also explain the close link between net household savings and government budget deficit. We present simulation results to illustrate the working of our model.
Original languageEnglish
Place of PublicationMaastricht
Number of pages38
Publication statusPublished - 1 Jan 2015

Publication series

SeriesUNU-MERIT Working Papers

JEL classifications

  • e44 - Financial Markets and the Macroeconomy
  • e60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
  • g32 - "Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill"


  • stock-flow consistent modelling
  • retained profits
  • current account surplus


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