The determinants of household saving in China: a dynamic panel analysis of provincial data

Charles Yuji Horioka () and Junmin Wan

No 2007-28, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: In this paper, we conduct a dynamic panel analysis of the determinants of the household saving rate in China using a life cycle model and panel data on Chinese provinces for the 1995-2004 period from China's household survey. We find that China's household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate, and (in some cases) the real interest rate and the inflation rate. However, we find that the variables relating to the age structure of the population usually do not have a significant impact on the household saving rate. These results provide mixed support for the life cycle hypothesis as well as the permanent income hypothesis, are consistent with the existence of inertia or persistence, and imply that China's household saving rate will remain high for some time to come.

Keywords: Saving; and; investment; -; China (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-dev, nep-mac and nep-tra
Date: 2007
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Related works:
Working Paper: The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data (2006)
Working Paper: The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data (2007)
Journal Article: The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data (2007)
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