Why are Saving Rates of Urban Households in China Rising?

Marcos Chamon (mchamon@imf.org) and Eswar Prasad

No 14546, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. Saving rates have increased across all demographic groups although the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high saving rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, as reflected in constraints on borrowing against future income and low returns on financial assets.

JEL-codes: D12 E21 O16 (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-cna, nep-dev, nep-mac, nep-mfd and nep-tra
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (80)

Published as Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.

Downloads: (external link)
http://www.nber.org/papers/w14546.pdf (application/pdf)

Related works:
Journal Article: Why Are Saving Rates of Urban Households in China Rising? (2010)
Working Paper: Why are Saving Rates of Urban Households in China Rising? (2008)
Working Paper: Why Are Saving Rates of Urban Households in China Rising? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:14546

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w14546

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).