What Drives Private Saving around the World?

The authors investigate the policy and non-policy factors behind saving disparities, using a large panel data set and an encompassing approach including several relevant determinants of private saving. They extend the literature in several dimensions, by: 1) Using the largest data set on aggregate saving assembled to date. 2) Using panel instrumental variable techniques to correct for endogeneity and heterogeneity. 3) Performing robustness checks on changes in estimation procedures, data samples, and model specification. Their main empirical findings: a) Private saving rates show considerable inertia (are highly serially correlated even after controlling for other relevant factors). b) Private sector rates rise with the level and growth rate of real per capita income. So policies that spur development are in indirect but effective way to raise private saving rates. c) Predictions of the life-cycle hypothesis are supported in that dependency ratios generally have a negative effect on private saving rates. d) The precautionary motive for saving is supported by the finding that inflation - conventionally taken as a summary measure of macroeconomic volatility - has a positive impact on private saving, holding other facts constant. e) Fiscal policy is a moderately effective tool for raising national saving. F) the direct effect of financial liberalization are largely detrimental to private saving rates. Greater availability of credit reduces the private saving rate; financial depth and higher real interest rates do not increase saving.

Bibliographic Details

Main Authors:	Loayza, Norman, Schmidt-Hebbel, Klaus, Serven, Luis
Language:	English en_US
Published:	World Bank, Washington, DC 2000-03
Subjects:	ANNUAL OBSERVATIONS, AVERAGE PROCESS, CAPITAL ACCUMULATION, CAPITAL GAINS, CENTRAL BANK, CONSUMERS, COUNTRY SPECIFIC, COUNTRY-SPECIFIC EFFECTS, CREDIT CONSTRAINTS, CROSS-COUNTRY RELATIONSHIP, CROSS-SECTION DATA, CURRENT PRICES, DATA AVAILABILITY, DATA SET, DATA SETS, DEMOGRAPHIC FACTORS, DEMOGRAPHIC TRANSITION, DEPENDENT VARIABLE, DESCRIPTIVE STATISTICS, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING WORLD, DEVELOPMENT RESEARCH, DISPOSABLE INCOME, DOMESTIC CREDIT, ECONOMETRIC ISSUES, ECONOMETRIC MODEL, EMPIRICAL ANALYSIS, EMPIRICAL ASSOCIATION, EMPIRICAL EVIDENCE, EMPIRICAL FINDINGS, EMPIRICAL REGULARITIES, EMPIRICAL STUDIES, EQUATIONS, ERROR TERM, ESTIMATED COEFFICIENTS, ESTIMATION METHOD, ESTIMATION RESULTS, ESTIMATION TECHNIQUES, EXCHANGE RATES, EXPLANATORY VARIABLE, EXPLANATORY VARIABLES, FINANCIAL DATA, FINANCIAL DEPTH, FINANCIAL LIBERALIZATION, FISCAL POLICY, FORECASTS, GNP, GROWTH EFFECT, GROWTH LITERATURE, GROWTH POLICIES, GROWTH RATE, GROWTH RATES, HIGH INFLATION, HOUSING, INCOME EFFECT, INCOME GROWTH, INCOME GROWTH RATE, INCOME LEVEL, INCOME LEVELS, INCOMES, INFLATION RATE, INTEREST RATE, INTEREST RATE CONTROLS, INTEREST RATES, LABOR FORCE, LAGGED DEPENDENT, LAGGED LEVELS, LAGGED VALUES, LOCAL GOVERNMENTS, M2, MACROECONOMIC INSTABILITY, MACROECONOMIC STABILIZATION, MACROECONOMICS, MEASUREMENT ERROR, MODEL SPECIFICATIONS, MONETARY POLICY, NEGATIVE COEFFICIENTS, NEGATIVE CORRELATION, NEGATIVE EFFECT, NEGATIVE IMPACT, NOMINAL INCOMES, NOMINAL INTEREST RATE, 0 HYPOTHESIS, PER CAPITA INCOME, POINT ESTIMATES, POLICY CHANGE, POLICY DETERMINANTS, POLICY PERSPECTIVE, POLICY RESEARCH, POLICY VARIABLES, POSITIVE COEFFICIENT, POSITIVE EFFECT, POSITIVE EFFECTS, POSITIVE IMPACT, PRIVATE AGENTS, PRIVATE SECTOR, PUBLIC CONSUMPTION, PUBLIC ENTERPRISES, PUBLIC INVESTMENT, PUBLIC POLICIES, PUBLIC SECTOR, RANDOM WALK, REAL INCOME, REAL INTEREST RATE, REAL INTEREST RATES, REGRESSION RESULTS, REGRESSION SAMPLE, SAVING RATE, SERIAL CORRELATION, SERIES OBSERVATIONS, SIGNIFICANT EFFECT, SIGNIFICANT EVIDENCE, SIGNIFICANT NEGATIVE, TERMS OF TRADE, TIME SERIES, URBANIZATION, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2000/03/437920/drives-private-saving-around-world https://hdl.handle.net/10986/18854
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