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Socio-economic Characteristics and Household Savings: An Analysis of the Households' Saving Behaviour in Pakistan

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Author Info

  • Nadeem A. Burney

    (Pakistan Institute of Development Economics, Islamabad.)

  • Ashfaque H. Khan

    (Pakistan Institute of Development Economics, Islamabad.)

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    Abstract

    Domestic resource mobilization is one of the key determinants of sustained economic growth. Pakistan's performance with regard to domestic resource mobilization has been poor despite maintaining a respectable economic growth rate. Why is the savings rate so low in Pakistan? In this paper we analyse the household savings behaviour in Pakistan, using micro level data of the Household Income and Expenditure Survey (HIES) for the year 1984-85. Three different non-linear savings functions attributed to Keynes, Klein, and Landau are estimated separately for the urban and the rural households, using the Ordinary Least Squares (OLS) technique. It is found that the average income and saving of an urban household are considerably higher than those of overall Pakistan or a rural household. However, contrary to the general belief, it is found that the propensity to save of the rural households is much higher than that of their urban counterparts. The dependency ratio and the various categories of education are found to have a negative influence on household savings. No systematic relationship is found between savings and the employment status and occupation of the household head. It is found, however, that saving increases with age but tends to decline when the age crosses a certain limit - a finding consistent with the Life Cycle Hypothesis.

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    File URL: http://www.pide.org.pk/pdf/PDR/1992/Volume1/31-48.pdf
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    Bibliographic Info

    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 31 (1992)
    Issue (Month): 1 ()
    Pages: 31-48

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    Handle: RePEc:pid:journl:v:31:y:1992:i:1:p:31-48

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Gupta, K L, 1970. "On Some Determinants of Rural and Urban Household Saving Behaviour," The Economic Record, The Economic Society of Australia, vol. 46(116), pages 578-83, December.
    2. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-96, December.
    3. White, Halbert, 1980. "Using Least Squares to Approximate Unknown Regression Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 149-70, February.
    4. Kelley, Allen C, 1988. "Population Pressures, Saving, and Investment in the Third World: Some Puzzles," Economic Development and Cultural Change, University of Chicago Press, vol. 36(3), pages 449-64, April.
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    Cited by:
    1. Ashfaque H. Khan & Zafar Mueen Nasir, 1998. "Stylised Facts of Household Savings: Findings from the HIES 1993-94," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 749-763.
    2. 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.
    3. Shahbaz, Muhammad & Nawaz, Kishwar & Arouri, Mohamed & Teulon, Frédéric & Uddin, Gazi Salah, 2013. "On the validity of the Keynesian Absolute Income hypothesis in Pakistan: An ARDL bounds testing approach," Economic Modelling, Elsevier, vol. 35(C), pages 290-296.
    4. Shahbaz Nasir & Mahmood Khalid, 2004. "Saving-investment Behaviour in Pakistan: An Empirical Investigation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 665-682.
    5. Ismail, Aisha & Rashid, Kashif, 2013. "Determinants of household saving: Cointegrated evidence from Pakistan (1975–2011)," Economic Modelling, Elsevier, vol. 32(C), pages 524-531.

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