The Mystery of Saving in Latin America

Ilan Noy, Eduardo Cavallo and Oscar Becerra

No 7311, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: Using reduced-form regression models, this paper shows that average predicted private saving rates in Latin America and the Caribbean (LAC) are significantly lower than in other regions, particularly Emerging Asia (about 4 percentage points of GDP on average). Predicted public saving rates in LAC are also lower than in Emerging Asia, but by a smaller margin (1 percentage point of GDP on average). It is further shown that LAC private saving rates are below the region-specific prediction by approximately 1. 5 percentage points of GDP on average. Finally, it is found that a greater reliance on external savings does not fully close the negative estimated private saving gap, reducing it by less than 1 percentage point. No gap is found in the case of public saving rates, suggesting that the lower predicted public saving rate in LAC is accounted for by the known determinants of fiscal policy.

Keywords: Saving rates, Saving gap, Determinants of saving, Private saving, Public saving *; IDB-WP-615 (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 2015-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:7311

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