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Transitional Dynamics of the Saving Rate and Economic Growth

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  • Markus Brueckner
  • Tomoo Kikuchi
  • George Vachadze

Abstract

We estimate the relationship between GDP per capita growth and the growth rate of the national savings rate using a panel of 130 countries over the period 1960-2017. We find that GDP per capita growth increases (decreases) the growth rate of the national savings rate in poor countries (rich countries), and a higher credit-to-GDP ratio decreases the national savings rate as well as the income elasticity of the national savings rate. We develop a model with a credit constraint to explain the growth-saving relationship by the saving behavior of entrepreneurs at both the intensive and extensive margins. We further present supporting evidence for our theoretical findings by utilizing cross-country time series data of the number of new businesses registered and the corporate savings rate.

Suggested Citation

  • Markus Brueckner & Tomoo Kikuchi & George Vachadze, 2020. "Transitional Dynamics of the Saving Rate and Economic Growth," Papers 2012.15435, arXiv.org, revised Jun 2021.
    • Handle: RePEc:arx:papers:2012.15435
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    References listed on IDEAS

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