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Why Are Saving Rates of Urban Households in China Rising?

  • Marcos D. Chamon
  • Eswar S. Prasad

From 1995 to 2005, the average urban household savings rate in China rose by 7 percentage points, to about one-quarter of disposable income. Savings rates increased across all demographic groups, and the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high savings rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, including constraints on borrowing against future income and low returns on financial assets. (JEL D14, E21, O12, O18, P25, P36)

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Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

Volume (Year): 2 (2010)
Issue (Month): 1 (January)
Pages: 93-130

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Handle: RePEc:aea:aejmac:v:2:y:2010:i:1:p:93-130
Note: DOI: 10.1257/mac.2.1.93
Contact details of provider: Web page: https://www.aeaweb.org/aej-macro
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