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Demographic Determinants of Savings: Estimating and Interpreting the Aggregate Association in Asia

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Author Info
T. Paul Schultz () (Economic Growth Center, Yale University)

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Abstract

Life cycle savings is proposed as one explanation for much of the increase in savings and economic growth in Asia. The association between the age composition of a nation's population and its savings rate, observed within 16 Asian countries from 1952 to 1992, is re-estimated here to be less than a quarter the size reported in a seminal study, which assumed lagged savings is exogenous. Specification tests as well as common sense imply, moreover, that lagged savings is likely to be endogenous, and when estimated accordingly there remains no significant dependence of savings on the age composition, measured in several ways. Research should consider lifetime savings as a substitute for children, and model the causes for the decline in fertility which changes the age compositions and could thereby account for savings and growth in Asia.

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Publisher Info
Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 901.

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Length: 36 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:egc:wpaper:901

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Related research
Keywords: Life Cycle Savings; Aging; Asian Growth; Demographic Transition;

Other versions of this item:

Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends and Forecasts
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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References listed on IDEAS
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.:
  1. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Discussion Papers 96-01, University of Copenhagen. Department of Economics.
    Other versions:
  2. B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2.
  3. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467. [Downloadable!] (restricted)
  4. Angus Deaton, 2003. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," NBER Working Papers 9822, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Ray C. Fair & Kathryn M. Dominguez, 1987. "Effects of the Changing U.S. Age Distribution on Macroeconomic Equations," Cowles Foundation Discussion Papers 839, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  6. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-96, December. [Downloadable!] (restricted)
  7. J.D. Angrist & Guido W. Imbens & D.B. Rubin, 1993. "Identification of Causal Effects Using Instrumental Variables," NBER Technical Working Papers 0136, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Hammer, Jeffrey S., 1986. "Children and savings in less developed countries," Journal of Development Economics, Elsevier, vol. 23(1), pages 107-118, September. [Downloadable!] (restricted)
  9. Matthew Higgins & Jeffrey G. Williamson, 1996. "Asian Demography and Foreign Capital Dependence," NBER Working Papers 5560, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Nerlove, Marc, 1971. "Further Evidence on the Estimation of Dynamic Economic Relations from a Time Series of Cross Sections," Econometrica, Econometric Society, vol. 39(2), pages 359-82, March.
    Other versions:
  11. Lee, Ronald D & Lapkoff, Shelley, 1988. "Intergenerational Flows of Time and Goods: Consequences of Slowing Population Growth," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 618-51, June. [Downloadable!] (restricted)
  12. Paxson, Christina, 1996. "Saving and growth: Evidence from micro data," European Economic Review, Elsevier, vol. 40(2), pages 255-288, February. [Downloadable!] (restricted)
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  13. Robert M. Schmidt & Allen C. Kelley, 1996. "Saving, dependency and development," Journal of Population Economics, Springer, vol. 9(4), pages 365-386.
  14. De Long, J Bradford & Summers, Lawrence H, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 445-502, May. [Downloadable!] (restricted)
    Other versions:
  15. Baltagi, Badi H. & Boozer, Michael A., 1997. "Econometric Analysis of Panel Data," Econometric Theory, Cambridge University Press, vol. 13(05), pages 747-754, October. [Downloadable!]
  16. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Barry Bosworth & Gabriel Chodorow-Reich, 2007. "Saving and Demographic Change: The Global Dimension," Working Papers, Center for Retirement Research at Boston College wp2007-02, Center for Retirement Research, revised Feb 2007. [Downloadable!]
  2. Ravallion, Martin, 2005. "On the contribution of demographic change to aggregate poverty measures for the developing world," Policy Research Working Paper Series 3580, The World Bank. [Downloadable!]
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