Saving behavior in low- and middle-income developing countries

Carmen Reinhart, Masao Ogaki and Jonathan Ostry

MPRA Paper from University Library of Munich, Germany

Abstract: The impact of changes in real interest rates on saving and growth is a central issue in development economics. According to one familiar view, a financial liberalization program which increases real interest rates should encourage saving, thereby boosting investment and growth. While such liberalizations have indeed typically succeeded in raising real interest rates, their impact on private saving has been mixed. This paper uses macroeconomic data for a sample of countries with diverse income levels to estimate a model in which the intertemporal elasticity of substitution varies with the level of wealth. The estimated parameters are then used ta calculate, in the context of a simple endogenous growth model, the responsiveness of saving to real interest xate changes for countries at differing stages of development.

Keywords: consumption; subsistence; low; income; real; interest; rates; liberalization (search for similar items in EconPapers)
JEL-codes: D1 D91 E6 (search for similar items in EconPapers)
Date: 1995-01
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Citations: View citations in EconPapers (37)

Published in IMF Staff Papers 1.43(1996): pp. 38-71

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Related works:
Journal Article: Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison (1996)
Working Paper: Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13757

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