The impact of social globalization on domestic savings: a long-run macroeconomic analysis of advanced ageing economies in the Asia-Pacific Region

The economics literature has extensively investigated the influence of demography and macroeconomic variables on domestic savings. However, another crucial aspect that needs to be considered in the literature is social globalization concerning conspicuous consumption, which may disproportionately impact savings behaviour in different countries. This paper aims to ascertain how social globalization affects domestic savings at the macroeconomic level in the long run, specifically focusing on countries that have reached advanced stages of ageing in the Asia-Pacific region. Cointegration analysis via the augmented autoregressive distributed lag (A-ARDL) bounds test is used in this paper. The main results show that social globalization and domestic savings are cointegrated in the long run for New Zealand, Japan, South Korea, and Hong Kong. Long-run relationship estimates yield that social globalization intensification leads to a decline in savings, supporting Veblen’s conspicuous consumption theory. Specifically, more Western-oriented countries experience a much more substantial impact of social globalization on savings. To address conspicuous consumption, policymakers should embrace a holistic strategy that encourages savings and financial prudence while discouraging excessive and status-oriented expenditure.