Can rising housing prices explain China’s high household saving rate?

Xin Wang and Yi Wen

Review, 2011, vol. 93, issue Mar, 67-88

Abstract: China?s average household saving rate is one of the highest in the world. One popular view attributes the high saving rate to fast-rising housing prices and other living costs in China. This article uses simple economic logic to show that rising housing prices and living costs per se cannot explain China?s high household saving rate. Although borrowing constraints and demographic changes can help translate housing prices to the aggregate saving rate, quantitative simulations using Chinese data on household income, housing prices, and demographics indicate that rising mortgage costs contribute at most 5 percentage points to the Chinese aggregate household saving rate, given the down payment structure of China?s mortgage markets.

Keywords: Housing - Prices; Consumer behavior; China; Economic conditions - China (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Working Paper: Can rising housing prices explain China’s high household saving rate? (2010)
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