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Why Aren't Developed Countries Saving?

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  • Loretti I. Dobrescu
  • Laurence J. Kotlikoff
  • Alberto F. Motta

Abstract

National saving rates differ enormously across developed countries. But these differences obscure a common trend, namely a dramatic decline over time. France and Italy, for example, saved over 17 percent of national income in 1970, but less than 7 percent in 2006. Japan saved 30 percent in 1970, but only 8 percent in 2006. And the U.S. saved 9 percent in 1970, but only 2 percent in 2006. What explains these international and intertemporal differences? Is it demographics, government spending, productivity growth or preferences? Our answer is preferences. Developed societies are placing increasing weight on the welfare of those currently alive, particularly contemporaneous older generations. This conclusion emerges from estimating two models in which society makes consumption and labor supply decisions in light of uncertainty over future government spending, productivity, and social preferences. The two models differ in terms of the nature of preference uncertainty and the extent to which current society can control future societies' spending and labor supply decisions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14580.

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Date of creation: Dec 2008
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Handle: RePEc:nbr:nberwo:14580

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  1. Jerry Green & Laurence J. Kotlikoff, 2006. "On the General Relativity of Fiscal Language," Boston University - Department of Economics - Working Papers Series WP2006-036, Boston University - Department of Economics.
  2. Hans Fehr & Sabine Jokisch & Laurence J. Kotlikoff, 2005. "Will China Eat Our Lunch or Take Us to Dinner? – Simulating the Transition Paths of the U.S., EU, Japan, and China," Boston University - Department of Economics - Macroeconomics Working Papers Series WP2005-009, Boston University - Department of Economics.
  3. repec:att:wimass:9220 is not listed on IDEAS
  4. Lilia Maliar & Serguei Maliar, 1999. "- Heterogeneity In Capital And Skills In A Neoclassical Stochastic Growth Model," Working Papers. Serie AD 1999-21, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Newey, Whitney K & West, Kenneth D, 1994. "Automatic Lag Selection in Covariance Matrix Estimation," Review of Economic Studies, Wiley Blackwell, vol. 61(4), pages 631-53, October.
  6. Pakes, Ariel & Pollard, David, 1989. "Simulation and the Asymptotics of Optimization Estimators," Econometrica, Econometric Society, vol. 57(5), pages 1027-57, September.
  7. Jonsson, Gunnar & Klein, Paul, 1996. "Stochastic fiscal policy and the Swedish business cycle," Journal of Monetary Economics, Elsevier, vol. 38(2), pages 245-268, October.
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  1. Why aren't developed countries saving?
    by UDADISI in UDADISI on 2012-08-02 01:09:00
  2. [??]??????????????????????
    by himaginary in himaginaryの日記 on 2012-08-03 07:00:00
  3. The Best 10 Economics Papers of 2012
    by UDADISI in UDADISI on 2012-12-13 22:44:00

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