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Savings Determinants in Colombia: 1925-1994

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  • Andrés Escobar
  • Mauricio Cardenas

Abstract

This paper analyzes the determinants of savings in Colombia using the framework of an intertemporal model. National saving partially responds to temporary changes in output, according to the permanent income hypothesis. Higher government expenditures (in relation to their permanent level) are associated with lower national saving, refuting the existence of Ricardian equivalence. The paper also tests other common hypotheses in regard to saving behavior. In particular, we find that changes in national savings and changes in investment are perfectly correlated, and that savings cause growth (in the Granger sense). The results also indicate that increases in urbanization and age dependency have had a significantly negative effect on private savings in Colombia. Finally, we find that much of the recent reduction in private savings can be accounted for by the increase in current government consumption, as well as by the effects of higher taxation.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 3009.

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Date of creation: Sep 1997
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Handle: RePEc:idb:wpaper:3009

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  1. Feldstein, Martin, 1983. "Domestic saving and international capital movements in the long run and the short run," European Economic Review, Elsevier, vol. 21(1-2), pages 129-151.
  2. Della Valle, Philip A & Oguchi, Noriyoshi, 1976. "Distribution, the Aggregate Consumption Function, and the Level of Economic Development: Some Cross-Country Results," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1325-34, December.
  3. Reinhart, Carmen & Ogaki, Masao & Ostry, Jonathan, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," MPRA Paper 6978, University Library of Munich, Germany.
  4. Jeffrey A. Frankel, 1991. "Quantifying International Capital Mobility in the 1980s," NBER Chapters, in: National Saving and Economic Performance, pages 227-270 National Bureau of Economic Research, Inc.
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  9. Mauricio Cárdenas & Mauricio Olivera, 1995. "La Crítica de Lucas y la inversión en Colombia: Nueva Evidencia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  10. Juan Carlos Echeverry, . "The Fall in Colombian Savings During the 1990s. Theory and Evidence," Borradores de Economia 061, Banco de la Republica de Colombia.
  11. Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
  12. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, December.
  13. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  14. Cardenas, Mauricio, 1994. "Stabilization and redistribution of coffee revenues: A political economy model of commodity marketing boards," Journal of Development Economics, Elsevier, vol. 44(2), pages 351-380, August.
  15. Giovannini, Alberto, 1985. "Saving and the real interest rate in LDCs," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 197-217, August.
  16. Jansen, W Jos & Schulze, Gunther G, 1996. "Theory-Based Measurement of the Saving-Investment Correlation with an Application to Norway," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 116-32, January.
  17. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
  18. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
  19. David Bunting, 1991. "Savings and the Distribution of Income," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 14(1), pages 3-22, October.
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  21. Musgrave, Philip, 1980. "Income Distribution and the Aggregate Consumption Function," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 504-25, June.
  22. Steven N. Kaplan & Luigi Zingales, 1995. "Do Financing Constraints Explain Why Investment is Correlated with Cash Flow?," NBER Working Papers 5267, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Mondher bellalah & Olivier Levyne & Omar Masood, 2013. "Does co-integration and causal relationship exist between the non-stationary variables for Chinese bank’s profitability? Empirical evidence," THEMA Working Papers 2013-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  2. Adenutsi, Deodat E., 2010. "Financial development, bank savings mobilization and economic performance in Ghana: evidence from a multivariate structural VAR," MPRA Paper 29571, University Library of Munich, Germany.
  3. Loumrhari, Ghizlan, 2013. "Vieillissement démographique, longévité et épargne. Le cas du Maroc
    [Ageing population, longevity and save. The case of Morocco]
    ," MPRA Paper 50649, University Library of Munich, Germany.
  4. Lavan Mahadeva & Javier Gómez Pineda, 2009. "The international cycle and Colombian monetary policy," BORRADORES DE ECONOMIA 005406, BANCO DE LA REPÚBLICA.
  5. Quartey, Peter, 2005. "Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana," Working Paper Series RP2005/71, World Institute for Development Economic Research (UNU-WIDER).
  6. Omar Masood & Priya Darshini Pun Thapa & Olivier Levyne & Frederic Teulon & Rabeb Triki, 2014. "Does Co-integration and Causal Relationship Exist between the Non- stationary Variables for Chinese Bank’s Profitability? An Empirical Evidence," Working Papers 2014-249, Department of Research, Ipag Business School.
  7. Ghizlan Loumrhari, 2014. "Ageing, Longevity and Savings: The Case of Morocco," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 344-352.
  8. Kelly, Roger & Mavrotas, George, 2003. "Financial Sector Development - Futile or Fruitful? An Examination of the Determinants of Savings in Sri Lanka," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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