Do Australian investment and savings behave procyclically?

This study uses spectral analysis to examine the behaviour of Australian savings and investment and their synchronisation with the business cycle over the period September 1959 to December 2005. The results reveal that the major cyclical components of savings and investment cohere strongly. Further, savings coheres strongly with the business cycle suggesting that Australian savings is procyclical. Investment also exhibits a procyclical pattern although the evidence of this is weaker