Micro Foundations of Savings Behavior in Urban Pakistan

Salman Ahmed Shaikh ()

MPRA Paper from University Library of Munich, Germany

Abstract: Savings rate in Pakistan is one of the lowest in the regional countries. As a result, investment to GDP ratio has been dismally low as well. Low investment results in low capital formation and hence lower long term growth and hence low levels of development. The long term growth literature from Harrod (1939)-Domer (1946), Solow (1956) to Romer (1986) is almost unanimous on the role of savings in long term economic growth. There have been studies in past on the macroeconomic determinants of savings in Pakistan. But, few studies have explored micro foundations of savings behavior in Pakistan. This study uses primary data collected through survey questionnaire to study the micro foundations of savings behavior in urban areas of Pakistan. We use descriptive as well as inferential tools for our study. We use LPM, Logit and Probit models to explore the determinants of investment and precautionary motive for savings.

Keywords: Savings; Intertemporal Consumption; Savings Motive; Investments; Rational Expectations; Asset Markets (search for similar items in EconPapers)
JEL-codes: G11 G22 G23 (search for similar items in EconPapers)
Date: 2013-12-12
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