The Determinants of Private Saving in India
AbstractThis paper examines the determinants of private saving in the process of economic development, in the light of the Indian experience during the period 1954 - 1998. The methodology involves the estimation of a saving rate function derived within the life cycle framework while paying attention to the structural characteristics of a developing economy. It is found that the saving rate rises with both the level and the rate of growth of disposable income and the magnitude of the impact of the former is smaller than that of the latter. The real interest rate on bank deposits has a significant positive impact, but the magnitude of the impact is modest. Public saving seems to crowd out private saving, but less than proportionately, suggesting that public policy can influence the national saving rate. Among the other variables considered, the spread of banking facilities in the economy and the rate of inflation seem to have a positive impact and changes in the external terms of trade and migrant remittances a negative impact on private saving.
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Bibliographic InfoArticle provided by Elsevier in its journal World Development.
Volume (Year): 32 (2004)
Issue (Month): 3 (March)
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Web page: http://www.elsevier.com/locate/worlddev
Other versions of this item:
- Prema-chandra Athukorala & Kunal Sen, 2001. "The Determinants Of Private Saving In India," ASARC Working Papers 2001-13, The Australian National University, Australia South Asia Research Centre.
- Athukorala, Prema-chandra & Sen, Kunal, 2001. "The Determinants of Private Saving in India," Departmental Working Papers 2001-12, The Australian National University, Arndt-Corden Department of Economics.
- D1 - Microeconomics - - Household Behavior
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
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