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

Xin Wang and Yi Wen

No 2010-048, Working Papers from Federal Reserve Bank of St. Louis

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 costs of living 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: Economic conditions - China; Housing - Prices; Consumer behavior; China (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-dev, nep-tra and nep-ure
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Journal Article: Can rising housing prices explain China’s high household saving rate? (2011)
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