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Private savings and transition

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  • Mechthild Schrooten
  • Sabine Stephan

Abstract

After the collapse in the early transition years, saving rates in Eastern European EU‐accession countries have recovered strongly. But is private saving in these countries now driven by the same forces as in the EU? A GMM estimator is applied to analyze the determinants of private saving in both country groups. The main results are: saving rates are rather persistent; income growth increases saving, whereas public saving crowds out private saving. There is evidence that in both country groups domestic saving and foreign capital operate at least partly as substitutes, which is an indicator for international financial integration. The long‐run effects of income growth and public saving are larger in the EU‐15 than in the EU‐accession countries.

Suggested Citation

  • Mechthild Schrooten & Sabine Stephan, 2005. "Private savings and transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(2), pages 287-309, April.
    • Handle: RePEc:bla:etrans:v:13:y:2005:i:2:p:287-309
    DOI: 10.1111/j.1468-0351.2005.00217.x
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    References listed on IDEAS

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