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Empirical Study on Saving and Investment Relation in China: 1952¡ª2011

Weiping Li (), Guotai Chi () and Lan Wu ()
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Weiping Li: University Chair Professor, Southwest Jiaotong University, Chengdu, Sichuan Providence, 610031, P. R. China; and Watson Faculty Fellow of Finance and Professor of Mathematics, Oklahoma State University, Stillwater, Oklahoma 74078-0613, U.S.A.
Guotai Chi: School of Business Management, Dalian University of Technology, Dalian, Liaoning 116024, P. R. China
Lan Wu: School of Business Management, Dalian University of Technology, Dalian, Liaoning 116024, P. R. China

Review of Economics & Finance, 2015, vol. 5, 81-99

Abstract: This paper empirically studies the relation between the domestic saving and the domestic investment with respect to the GDP national income for China during the 60-year period, 1952--2011. We adapt the method in Feldstein and Horioka (1980) for developed OECD countries to the developing country China, and analyze the change on the relation of national investment proportion and national saving proportion from three different sub-periods according to the national policy changes. We show that the saving proportion series and the investment proportion series in China during 1952--2011 under the first order difference are steady and co-integrated of order one. Due to economic reform in China since 1978, the nonlinear (square-root) cross-section regression is presented from empirical analysis. Furthermore, we specify the openness of the economy, the household saving, corporate and government saving to see the relation change.

Keywords: Nonlinear cross-section regression; Domestic saving; Gross domestic investment; Gross domestic product; Household saving; Corporate saving; Government saving (search for similar items in EconPapers)
JEL-codes: E21 E22 F36 O16 (search for similar items in EconPapers)
Date: 2015
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