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Abstract

This paper examines the extent to which the conclusions of cross-country studies of private savings are robust to allowing for the possible heterogeneity of savings behaviour across countries and for the inclusion of dynamics. It reviews the econometric implications of neglected slope heterogeneity and dynamics for the fixed effects estimators routinely used in such studies, and illustrates the nature and extent of the biases involved by a re-examination of time series data from 21 OECD countries. The paper shows that neglecting heterogeneity and dynamics in cross-country savings regressions can lead to misleading inferences about the key determinants of savings behaviour. The results indicate that among the many variables considered in the literature only the fiscal variables - the general government surplus as a proportion of GDP and the ratio of government consumption to GDP - seem to be the key determinants of private savings rates in the industrial countries in the post-World War II period

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 99/128.

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Date of creation: 01 Sep 1999
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Handle: RePEc:imf:imfwpa:99/128

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Find related papers by JEL classification:

• E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
• C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series

This paper has been announced in the following NEP Reports:

• NEP-ALL-2013-02-16 (All new papers)

References

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