Saving - What Do We Know, and Why Do We Care?
In principle, there is little reason
people, and countries facing different shocks, and income
streams should strive for optimal saving rates. But in
practice, the inter-temporal choices that underlie saving,
are subject to externalities, market failures, and policy
distortions, that can cause saving rates to differ from
welfare-maximizing levels. The social value of saving could
also exceed its private value, because of imperfections in
global financial markets. Still, a national saving rate
broadly in line with an economy's investment rate,
reduces vulnerability to sudden shifts in international
capital flows, driven by uncontrollable behavior, or
self-fulfilling investor expectations. Yet, as shown by the
recent East Asia crisis, high saving alone does not provide
complete insurance against the consequences of weak
financial systems, or unsustainable exchange rate policies.
This is the subject analyzed in this note, through a recent
Bank research project, that shows savings has important
interactions with income and growth, with resulting
implications for policy. Such policies that spur development
are an indirect, but effective way to raise private saving.
The note further examines this private saving, and public
policy, outlining fiscal issues, financial liberalization,
and the impact of pension reform. The note reflects on
situations where reforms both invite aid, and induce higher
investment and growth - so that aid and saving rise together
- concluding that aid need not invariably crowd out national saving.
Saved in:
Bibliographic Details
Main Authors: |
Loayza, Norman,
Servén, Luis,
Schmidt-Hebbel, Klaus |
Language: | English |
Published: |
World Bank, Washington, DC
1999-08
|
Subjects: | CAPITAL FLOWS,
CAPITAL MARKET,
CURRENT PRICES,
DATA SET,
DEMOGRAPHICS,
DEVELOPMENT ECONOMICS,
DISPOSABLE INCOME,
DOWN PAYMENTS,
ECONOMIC POLICY,
ELASTICITY,
EMPIRICAL RESULTS,
EMPIRICAL STUDIES,
EXCHANGE RATE,
EXTERNALITIES,
FACE VALUE,
FINANCIAL INSTITUTIONS,
FINANCIAL INTERMEDIATION,
FINANCIAL LIBERALIZATION,
FINANCIAL MARKETS,
FINANCIAL SYSTEMS,
FOREIGN AID,
FUNDED SCHEMES,
GROWTH RATE,
GROWTH RATES,
HUMAN CAPITAL,
INCOME,
INCOME EFFECT,
INCOME LEVEL,
INCOME LEVELS,
INCOMES,
INCREASE,
INFLATION,
INSURANCE,
INTEREST RATES,
LABOR FORCE,
LABOR MARKET,
MARKET DISTORTIONS,
MARKET IMPERFECTIONS,
NEGATIVE EFFECT,
NEGATIVE IMPACT,
NEOCLASSICAL GROWTH,
NEOCLASSICAL GROWTH THEORY,
NET WORTH,
PAYMENTS ON LOANS,
PER CAPITA INCOME,
POLICY MEASURES,
POOR COUNTRIES,
POSITIVE EFFECT,
POVERTY REDUCTION,
PRIVATE AGENTS,
PUBLIC DEBT,
PUBLIC POLICY,
RETIREMENT,
SAVINGS,
STREAMS,
TAX INCENTIVES,
URBANIZATION SAVINGS BEHAVIOR,
SAVINGS PROMOTION,
EXTERNAL SHOCKS,
INCOME FLUCTUATIONS,
MARKET FAILURE,
POLICY FAILURE,
SOCIAL WELFARE,
PRIVATE VALUE,
FINANCIAL MANAGEMENT,
INVESTMENT RATE,
INTERNATIONAL CAPITAL MARKET VOLATILITY,
INSURANCE VALUES,
FINANCIAL CRISES,
RESEARCH PROJECTS,
INCOME GENERATION,
ECONOMIC GROWTH,
PRIVATE SAVINGS,
FISCAL EFFICIENCY,
PENSION REFORM, |
Online Access: | http://documents.worldbank.org/curated/en/1999/08/2505516/saving-know-care
https://hdl.handle.net/10986/11468
|
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