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Household Saving in Chile: Microeconomic Evidence

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  • Andrea Butelmann P
  • Francisco Gallego

    (Banco Central de Chile)

Abstract

Saving behavior at the household level in Chile has not been analyzed in recent decades. Based on 1988 and 1996-1997 Chilean microeconomic evidence (Household Budget Survey), this article studies household saving behavior. The analysis is extended to include broader definitions of saving such as investment in human capital and durable goods purchases. Income and permanent characteristics such as education are shown to be important determinants of the rate of household saving. Furthermore, we find an income/expenditure parallelism and positive saving rates for the elderly. At a first stage of analysis, these facts contradict the predictions of the life cycle theory, but some corrections (using demographic corrections and a different treatment of pensions) change these preliminary conclusions. Differences in credit constraints faced by different groups are studied for their likely effects on consumption smoothing. Finally saving rates of the elderly are analyzed focusing on their contradictory role found in macro and micro studies.

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Bibliographic Info

Article provided by Central Bank of Chile in its journal Economía Chilena.

Volume (Year): 3 (2000)
Issue (Month): 1 (April)
Pages: 5-24

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Handle: RePEc:chb:bcchec:v:3:y:2000:i:1:p:5-24

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  1. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
  2. Tullio Jappelli & Franco Modigliani, 1998. "The Age-Saving Profile and the Life-Cycle Hypothesis," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 09, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  3. Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(1), pages 219-34, February.
  4. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time and Goods over the Life Cycle," NBER Books, National Bureau of Economic Research, Inc, number ghez75-1.
  5. Andrea Butelmann P & Francisco Gallego, 2000. "Household Saving in Chile: Microeconomic Evidence," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, Central Bank of Chile, vol. 3(1), pages 5-24, April.
  6. Attanasio, O.P. & Browning, M.J., 1993. "Consumption over the life cycle and over the business cycle," Discussion Paper, Tilburg University, Center for Economic Research 1993-14, Tilburg University, Center for Economic Research.
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  21. Gilbert Ghez & Gary S. Becker, 1975. "A Theory of the Allocation of Time and Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 1-45 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Andrea Butelmann & Francisco Gallego, 2000. "Household Saving in Chile: Microeconomic Evidence," Working Papers Central Bank of Chile, Central Bank of Chile 63, Central Bank of Chile.
  2. Craig P. Aubuchon & Juan Carlos Conesa & Carlos Garriga, 2011. "A primer on social security systems and reforms," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 19-35.
  3. Juan A. Rojas & Carlos Urrutia, 2006. "Social Security Reform with Uninsurable Income Risk and Endogenous Borrowing Constraints," Banco de Espa�a Working Papers 0602, Banco de Espa�a.
  4. Gan-Ochir Doojav & Borkhuu Gotovsuren & Tsenddorj Dorjpurev, 2012. "Financial Contagion and Volatile Capital Flows," Occasional Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, South East Asian Central Banks (SEACEN) Research and Training Centre, number occ56, June.
  5. World Bank, 2011. "Turkey - Country Economic Memorandum (CEM) : Sustaining High Growth - The Role of Domestic savings : Synthesis Report," World Bank Other Operational Studies 12264, The World Bank.
  6. Juan A. Rojas & Carlos Urrutia, 2008. "Social Security with Uninsurable Income Risk and Endogenous Borrowing Constraints," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 83-103, January.

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