Determinants of Household Savings in China: An Empirical Analysis Based on the VAR Model

Xingjian Yao ()
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Xingjian Yao: China Agricultural University, College of Economics and Management

A chapter in Proceedings of the 2025 10th International Conference on Social Sciences and Economic Development (ICSSED 2025), 2025, pp 860-869 from Springer

Abstract: Abstract Savings constitute a crucial source of a nation’s capital and hold significant implications for national economic development. This paper constructs a VAR model using the savings rate as the independent variable and selecting per capita gross national product, national fiscal expenditure, the proportion of the population aged 25–34 with higher education, and the dependency ratio as dependent variables for the period 1988–2022. The results indicate that: (1) There exists a long-term cointegration relationship among these four variables, with the proportion of the population aged 25–34 with higher education showing a positive correlation with the savings rate, while the other variables exhibit negative correlations. (2) Based on impulse response and variance decomposition analyses, both the proportion of the population aged 25–34 with higher education and per capita gross national product exert substantial influences on the savings rate. Drawing from these findings, this paper proposes the following recommendations for government regulation of the savings rate: (1) Implement reasonable adjustments to the dependency ratio, balancing family economic pressures with future labor supply; (2) Exercise prudent control over national fiscal expenditure, strengthen fiscal supervision, and guide the allocation of economic resources; (3) Enhance the educational attainment of residents to promote human capital accumulation and foster proper savings attitudes; (4) Vigorously develop production and strive to improve per capita gross national product.

Keywords: Savings Rate; VAR Model; Impulse Response and Variance Decomposition; Cointegration Analysis; Economic Development (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-734-2_96

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