What Drives Private Saving Across the World?

Abstract

Saving rates display considerable variation across countries and over time. This paper investigates empirically the policy and nonpolicy factors behind these saving disparities using a large, cross-country, time-series data set and following an encompassing approach including a number of relevant private saving determinants. The paper extends the literature in several dimensions. It uses the largest data set on aggregate saving assembled to date and explores both national and private saving determinants. It uses panel instrumental-variable techniques to correct for endogeneity and heterogeneity. Finally, it performs a variety of robustness checks to changes in estimation procedures, data samples, and model specification. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Macroeconomic adjustment and the history of crises in open economies

“…18 Given our interest in the importance of aggregate country-level historical experiences and the way market participants adjust to them, our investigation has to be pursued using country-wide data. Recent papers most similar to ours in their empirical approach and specifications are Loayza et al (2000) and Kinugasa and Mason (2007), though the latter's interest is mostly the demographic 18 The literature on the determinants of saving behaviour for households is much too extensive for us to discuss herein. Some projects examine aggregate macro-economic data at the local level within a country (e.g., Horioka and Wan, 2007, for an investigation of Chinese saving rates at the provincial level).…”

“…Loayza et al (2000) use a panel dataset of saving rates for 1965-1994 and a very large sample of countries to estimate their determinants. Like our work, they pursue a reduced-form approach that attempts to identify broad regularities in the data rather than is wedded to a specific structural theory of saving.…”

Political Preferences and the Aging of Populations

“…The earlier literature has found quite a large impact, concluding that a 1 per cent increase in the old-age dependency ratio should, ceteris paribus, lead to a reduction in household savings of around 1 per cent (see Feldstein (1980); Masson and Tryon (1990)). More recent estimates come up with more modest but still significant results of below -0.5 per cent (see Masson et al (1998);Loayza et al (2000)). Note that a reduction in capital intensity due to fewer savings may potentially be offset by a substitution effect.…”

Global imbalances and household savings: The role of wealth

“…Moreover, while the seminal studies tested static models with a large number of regressors (Edwards, 1995, Loayza et al, 2000, after a pathbreaking paper by Haque et al (1999), dynamic models and heterogeneous panel estimators are now thought to fit the data better and are used in the majority of studies. 4 Haque et al (1999) The usual justification for the use of private savings instead of household savings is that there is a perfectly negative correlation between household savings and corporate savings.…”

“…Another is Bloom et al (2003) who use a modified version of the life cycle model to study the effects of health and longevity. Loayza et al (2000) use the GMM estimator developed by Arellano and Bond (1991) to better deal with endogeneity problems.…”