Demographic Patterns and Household Saving in China

Abstract

For useful comments, we thank Joe Kaboski and seminar participants at the Federal Reserve Bank of St. Louis, Notre Dame's macro research group, Notre Dame's Kellogg Institute, and the Hong Kong Monetary Institute. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Global Demographic Change and Climate Policies

“…The above two corollaries capture the spirit of the empirical literature, which suggests that both increasing life-expectancy and decreasing fertility over the last decades have increased aggregate household savings rates and decreased the capital returns (Imrohoroglu and Zhao, 2017;Carvalho et al, 2016;Curtis et al, 2015;Eggertsson and Mehrotra, 2014;Bloom et al, 2007Bloom et al, , 2003Curtis et al, 2015;Sánchez-Romero, 2013 …”

“…Secondly, we relate to recent economic research suggesting that demographic patterns over the last decades have increased aggregate household savings rates and decreased the capital returns, mainly through shifts in the age structure of the population (Canton and Meijdam, 1997;Bloom et al, 2003Bloom et al, , 2007Eggertsson and Mehrotra, 2014;Curtis et al, 2015;Carvalho et al, 2016;Imrohoroglu and Zhao, 2017). Demography also drives part of international trade and capital flows, which reflect discrepancies between savings and investments across countries (Backus et al, 2014;Fedotenkov et al, 2014;Krueger and Ludwig, 2007).…”

“…Demographic change has been connected to housing prices, since lower returns to capital in the future create incentives for seeking alternative stores of value (Chen and Wen, 2017), and changes in social security systems due to population aging (Imrohoroglu and Zhao, 2017;Cipriani, 2014;Fanti and Gori, 2012). Curtis et al (2015) show that demographic patterns are able to explain over half of the household savings rate fluctuations in China, while Sánchez-Romero (2013) finds that the demographic transition in Taiwan, during the period 8 Notice that in our modelling, demographic variables are exogenous and temperature changes only affect production. Several studies assess the effect of population aging on emissions and the environment, see Balestra and Dottori (2012), Jouvet et al (2010), Varvarigos (2010), Mariani et al (2010), andOno (2005).…”

China’s Demography and its Implications

“…By contrast, the approach in our paper is closest in spirit to Curtis et al (2011) in terms of taking into account the entire age distribution and incorporating the future time-path of demographics and other variables. Their paper finds that incorporating changing demographics in this way can help explain much of the evolution in China's household saving rate between 1955 and 2009.…”

The Impact of Public Pension on Household Consumption: Evidence from China’s Survey Data

“…In fact, saving behaviors in China could be explained by life-cycle assumptions, and the dependency ratio has had an impact on residents' saving behavior [28,29]. construct a model of overlapping generations (OLG), in which individuals live for 85 years; individuals make no decisions and depend on their parents for consumption before age 20; individuals from 20 to 63 years old work, raise children, and also transfer a portion of their labor income to current retirees by the pay-as-you-go public pension system; retirees above 64 years old live off their accumulated assets, pensions, and family transfers [30]. They build budget constraints for households with children and retirees subjected to each preference as follows:…”