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Private Savings in Transition Economies: Are there Terms of Trade Shocks?

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  • Abdur R Chowdhury

    () (Department of Economics, Marquette University, Milwaukee, WI 53201, USA.)

Abstract

Economic agents in the transition economies are subject to tight credit constraints, which are more pronounced during bad state of nature. Thus, adverse shocks to commodity prices in the world market can force them to reduce savings by a larger amount than they would otherwise have. Empirical analysis using a dynamic panel model and data from 21 transition economies confirm that most of the determinants of savings identified in the literature also apply to the transition economies. The transitory component in the terms of trade have a larger positive impact than the permanent component. This reflects the lack of access to foreign borrowing. Although the impact of terms of trade shocks is found to be asymmetric, the magnitude of the impact appears to be small. The results are robust for alternative estimators, determinants and country groupings. Comparative Economic Studies (2004) 46, 487–514. doi:10.1057/palgrave.ces.8100027

Suggested Citation

  • Abdur R Chowdhury, 2004. "Private Savings in Transition Economies: Are there Terms of Trade Shocks?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(4), pages 487-514, December.
  • Handle: RePEc:pal:compes:v:46:y:2004:i:4:p:487-514
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    3. Timo Baas, 2006. "Die Disparität der Sparquoten Ost- und Westdeutschlands: kann der spezifische ostdeutsche Transformationsprozess die Abweichung erklären?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(4), pages 121-134.
    4. Chowdhury, Abdur, 2015. "Terms of trade shocks and private savings in the developing countries," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 1122-1134.
    5. Tomasz Jasiński & Paweł Mielcarz, 2013. "Consumption as a Factor of Polish Economic Growth During the Global Recession of 2008/2009: A Comparison with Spain and Hungary," Contemporary Economics, University of Finance and Management in Warsaw, vol. 7(2), June.
    6. Merike Kukk & Karsten Staehr, 2015. "Macroeconomic factors in corporate and household saving. Evidence from Central and Eastern Europe," Bank of Estonia Working Papers wp2015-5, Bank of Estonia, revised 30 Dec 2015.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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