The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data

Abstract

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. : 81-6-6879-8586, Fax: 81-6-6878-2766, Email: horioka@iser.osaka-u.ac.jp Forthcoming in Journal of Money, Credit and Banking, vol. 39, no. 8 (December 2007). Terms of use: Documents in 1 AbstractIn this paper, we conduct a dynamic panel analysis of the determinants of the household saving rate in China using a life cycle model and panel data on Chinese provinces for the 1995-2004 period from China's household survey. We find that China's household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate, (in many cases) the real interest rate, and (in some cases) the inflation rate. However, we find that the variables relating to the age structure of the population have the expected impact on the household saving rate in only one of the four samples. These results provide mixed support for the life cycle hypothesis as well as the permanent income hypothesis, are consistent with the existence of inertia or persistence, and imply that China's household saving rate will remain high for some time to come.Journal of Economic Literature classification numbers: D12, D91, E21, J10.

Spatial Econometric Analysis of Urban and County-level Economic Growth Convergence in China

“…Results also show restrictive citizen savings effects on economic development, suggesting that high saving rates among Chinese residents do not have a positive effect on GDP per capita growth. This may be attributable to the fact that China's high savings rate does not translate into investment ability and instead reinforces low investment efficiency (Cristadoro and Marconi 2012;Horioka and Wan 2007). Multiplier effects have not played their role, and savings capital is deposited in banks (Kuijs 2005;Xu, Yang, and Ma 2016).…”

Income inequality, consumption, and social-status seeking

“…According to the Chinese Urban Household Survey data, the average propensity to consume (net of education expenditures) of urban residents declined from 81.6% in 1997 to 74.7% in 2006. 1 Several explanations have been proposed for this phenomenon, including demographic changes (Kraay, 2000;Modigliani and Cao, 2004), high income growth and habit (Horioka and Wan, 2007), precautionary savings (Chamon and Prasad, 2010;Kuijs, 2006;Meng, 2003), change in the return rate of investment (Wen, 2009), and increasing sex ratio (Wei and Zhang, 2009).…”

International effects of China's rise and transition: Neoclassical and Keynesian perspectives

“…The pattern and time trend of household saving in China and other Asian economies is analysed by Horioka and Wan (2007) and Horioka and Terada-Hagiwara (2012). They point out that the three main determinants of rates of measurable household saving are the age structure of the population and the levels of income and financial sector development.…”