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A Theory of the Competitive Saving Motive

Listed author(s):
  • Qingyuan Du

    (Monash University)

  • Shang-Jin Wei

    (Columbia University, National Bureau of Economic Research and Hong Kong Institute for Monetary Research)

Motivated by recent empirical work, this paper formalizes a theory of competitive savings - an arms race in household savings for mating competition that is made more fierce by an increase in the male-to-female ratio in the pre-marital cohort. Relative to the empirical work, the theory can clarify a number of important questions: What determines the strength of the savings response by males (or households with a son)? Can women (or households with a daughter) dis-save? What are the conditions under which aggregate savings would go up in response to a higher sex ratio? This theory can potentially help to understand the savings patterns in China, India, Vietnam, Singapore, Hong Kong, and other economies that have experienced a dramatic increase in the pre-marital sex ratio.

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Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 252013.

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Length: 41 pages
Date of creation: Dec 2013
Handle: RePEc:hkm:wpaper:252013
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