The effects of age and cohort on household saving

Petri Mäki-Fränti

No 6/2022, BoF Economics Review from Bank of Finland

Abstract: According to the standard life cycle model, household saving rate should peak at the best working age and turn then to decline so that households dissolve their savings after retirement. This study examines, how age and birth cohort affect the saving behavior of the Finnish households. A synthetic panel data is used to estimate an empirical age-cohort-period model of income, consumption and saving rate of the households. The results suggest that the Fnnish households continue saving even in the old age and younger cohohorts tend to save more than the older ones. Thus, a projected aggregate saving rate of the Finnish economy will slightly increase during the next two decades.

Keywords: population aging; household saving; age-cohor-period models; synthetic cohort (search for similar items in EconPapers)
JEL-codes: E21 J11 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-age
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofecr:62022

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