China's Savings Multiplier

Halvor Mehlum, Ragnar Torsvik () and Simone Valente
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Ragnar Torsvik: Norwegian University of Science and Technology, Postal: Norwegian University of Science and Technology Department of Economics , Dragvoll , N-7491 Trondheim, Norway
Authors registered in the RePEc Author Service: Ragnar Torvik

No 17/2013, Memorandum from Oslo University, Department of Economics

Abstract: China's growth is characterized by massive capital accumulation, made possible by high and increasing domestic savings. In this paper we develop a model with the aim of explaining why savings rates have been high and increasing, and we investigate the general equilibrium effects on capital accumulation and growth. We show that increased savings and capital accumulation stimulates further savings and capital accumulation, through an intergenerational distribution effect and an old-age requirement effect. We introduce what we term the savings multiplier, and we discuss why and how the one-child policy, and the dismantling of the cradle-to-grave social benefits provided through the state owned enterprises, have stimulated savings and capital accumulation.

Keywords: China; One-child policy; Overlapping generations; Growth; Savings (search for similar items in EconPapers)
JEL-codes: D91 E21 O11 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2013-07-04
New Economics Papers: this item is included in nep-dem, nep-dge, nep-fdg, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: China s Savings Multiplier (2013)
Working Paper: China's Savings Multiplier (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2013_017

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