Targets, Interest Rates, and Household Saving in Urban China

Nabar, Malhar

doi:10.5089/9781463904258.001

Cited by 29 publications

(22 citation statements)

References 24 publications

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“…This is not surprising given that the data for financial center countries (e.g., Ireland; Hong Kong, China; Singapore) and heavily indebted countries can be outliers affecting the estimation results. 17 Nabar (2011) and Geerolf and Grjebine (2013) find similar results.…”

Section: Level Impacts Of the Interest Ratesmentioning

confidence: 62%

“…While the interest rate effect on private saving is commonly perceived to be positive, Nabar (2011) notes that the People's Republic of China (PRC) experienced a combination of rising household saving and declining real interest rates during the 2000s. Using province-level data over the 1996-2009 period, Nabar empirically shows that when the return to saving declines, household saving rises.…”

Section: Introductionmentioning

confidence: 99%

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The Interest Rate Effect on Private Saving: Alternative Perspectives

Aizenman

Cheung²,

Ito

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication.Unless otherwise stated, boxes, figures, and tables without explicit sources were prepared by the authors.ADB recognizes "China" as the People's Republic of China. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Working papers are subject to formal revision and correction before they are finalized and considered published.Asian Development Bank Institute Kasumigaseki Building, 8th Floor 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, JapanTel:+81-3-3593-5500 Fax:+81-3-3593-5571 URL:www.adbi.org E-mail: info@adbi.org AbstractConventional logic suggests that lowering the policy interest rate will stimulate consumption and investment while discouraging people from saving, but low interest rates may also prompt people to increase their saving to compensate for the low rate of return. Using data on 135 countries from 1995 to 2014, this paper shows that a low-interest rate environment can yield different effects on private saving across country groups under different economic environments. A well-developed financial market, an aging population, and output volatility can all contribute towards turning the relationship between interest rates and saving negative. Among developing countries, when the nominal interest rate is not too low, we detect the substitution effect of the real interest rate on private saving. However, among industrial and emerging economies, the substitution effect is detected only when the nominal interest rate is lower than 2.5%. In contrast, emerging-market Asian countries are found to have the income effect when the nominal interest rate is below 2.5%. When we examine the interactive effects between the real...

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Section: Level Impacts Of the Interest Ratesmentioning

confidence: 62%

Section: Introductionmentioning

confidence: 99%

The Interest Rate Effect on Private Saving: Alternative Perspectives

Aizenman

Cheung²,

Ito

2016

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“…Whereas studies by Levine et al (2001), Bekaert and Campbell (2003) and Bonfiglioli and Mendicino (2004) show that interest rate has a positive relationship with savings, others such as Nabar (2011) showed that interest rate has a negative relationship with savings particularly in China. Also at the demographic front, the relationship between children and savings is yet to be concluded in both theoretical and empirical strands either at the macro or micro level (Charles, 2013).…”

Section: Introductionmentioning

confidence: 92%

Effects of selected socio-economic factors and elections spending on aggregate savings (total deposits) in Ghana

Mumin¹,

Abdulai²,

Hamza³

2016

J. Econ. Int. Finance

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Savings as a tool for domestic capital accumulation in developing countries has come under serious consideration in economic and financial development. However, savings in Ghana is characterized by very low tendencies, irregular trend and unenthusiastic attitudes of citizens towards it at the micro and macro levels. This study examined the effect of economic factors, election spending and health financing scheme on aggregate savings in Ghana. Time series spanning from 1997 to 2012 was used. The Dickey-Fuller Generalised Least Squares (DF-GLS), Johansen Cointegration technique and Vector Error Correction method were used for data analysis. The study revealed that the financial (interest rate spread and Treasury bill), and real sectors (GDP growth and international investment) and health financing scheme had significant effect in influencing aggregate savings in the long run. In addition to past savings, 91-day Treasury bill, age dependency and health financing scheme were short-run determinants of aggregate savings in Ghana although these dynamics were not immediate. As such, policies to influence aggregate savings should consider not only the financial instruments but also deal with the socio-demographic and the real sector dynamics of the economy as a whole in the intermediate to long-run basis.

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“…Notwithstanding the popular hypothesis that financial repression has contributed to the imbalances by suppressing consumption growth (Lardy, 2008;Nabar, 2011;Pettis, 2013), the speed with which consumption has grown to date suggests that it may be optimistic to hope that even stronger consumption growth in coming years will resolve the imbalances.…”

Section: China's Expenditure Imbalancementioning

confidence: 99%

Rebalancing China's Economy: Domestic and International Implications

Roberts

Kelly

2017

China and World Economy

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This paper considers interactions between China's domestic and external imbalancesand their global implications. We present scenarios detailing how a rebalancing of China's growth pattern from investment-driven growth towards more consumption-driven growth may occur in practice. Using input-output tables for 2012, we illustrate the knife-edged nature of Chinese rebalancing, the linkages between expenditure-side and production-side rebalancing, and how an internal rebalancing could exacerbate external imbalances. A policy implication for China is that for rebalancing to be fast, consumption must be exceptionally resilient and the effi ciency of investment must increase sharply. If rebalancing is too slow, the capital-to-output ratio will rise to potentially unsustainable levels and consumption will fail to attain levels of contemporary upper middle-income economies by 2030. Global input-output tables (1995Global input-output tables ( -2011 suggest that the patterns of Chinese rebalancing considered in our scenarios may generate substantial headwinds for exports to China by its trading partners.

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Targets, Interest Rates, and Household Saving in Urban China

Cited by 29 publications

References 24 publications

The Interest Rate Effect on Private Saving: Alternative Perspectives

The Interest Rate Effect on Private Saving: Alternative Perspectives

Effects of selected socio-economic factors and elections spending on aggregate savings (total deposits) in Ghana

Rebalancing China's Economy: Domestic and International Implications

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