Why are Saving Rates so Different Across Countries?: An International Comparative Analysis

Sebastian Edwards

No 5097, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the determinants of savings in the world economy, and discusses why saving ratios have been so uneven across countries. A distinction is made between private and government savings, using panel data for 36 countries, from 1970 to 1992. In particular, it is assumed that government savings are not completely exogenous, and respond to both economic and political (strategic) determinants, along the lines of the recent literature on the political economy of macroeconomic policy. Using instrumental variables estimation methods it is found that per capita growth is one of the most important determinants of both private and public savings. The results indicate that government-run social security systems affect private savings negatively. In addition, the results provide some support for the political economy perspective to government finances, which evidences a different underlying process determining public savings. Public savings tend to be lower in countries with higher political instability. Higher government savings crowd out private savings, but in a less than proportional fashion. Higher levels of foreign savings - i.e. reductions in the current account balance - are associated with lower domestic (both private and public) saving rates, although the degree of offset is also less than proportional. The degree of financial development turns out to be another important determinant of private savings. The results are mixed regarding the role of borrowing constraints - a topic deserving additional research attention.

JEL-codes: E2 F4 (search for similar items in EconPapers)
Date: 1995-04
Note: IFM ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (161)

Published as "Why are Latin America's Savings Rates So Low? An International Comparative Analysis", Journal of Development Economics, Vol. 51, no. 1(October 1996): 5-44.

Downloads: (external link)
http://www.nber.org/papers/w5097.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:5097

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w5097

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().