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What Explains Private Saving in Mexico?

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  • Andrew J Swiston
  • Ales Bulir

Abstract

This paper examines the factors influencing Mexico's private saving rate. Cross-country analysis finds that Mexico's private saving is somewhat higher than could be explained by its fundamentals, but lower than in the average country in the sample. This analysis suggests that Mexico's greater reliance on external saving, its relatively high population dependency ratio, and its less developed financial system have been the main factors holding back private saving. Time-series analysis finds that movements in private saving have not been associated with similar shifts in investment, as changes in public saving and external saving have tended to offset movements in private saving. This is consistent with the direction of causality being from investment to saving and suggests that policy measures should focus on creating conditions favorable to increased investment.

Suggested Citation

  • Andrew J Swiston & Ales Bulir, 2006. "What Explains Private Saving in Mexico?," IMF Working Papers 06/191, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/191
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=19505
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    References listed on IDEAS

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    1. A. Javier Hamann, 1993. "Private Saving, Public Saving, and the Inflation Tax; Another Look At An Old Issue," IMF Working Papers 93/37, International Monetary Fund.
    2. Marco A. Espinosa-Vega & Tapen Sinha, 2000. "A primer and assessment of social security reform in Mexico," Economic Review, Federal Reserve Bank of Atlanta, issue Q1, pages 1-23.
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    Cited by:

    1. Macias, Jose Brambila & Cazzavillan, Guido, 2009. "The dynamics of parallel economies. Measuring the informal sector in Mexico," Research in Economics, Elsevier, vol. 63(3), pages 189-199, September.
    2. Néstor Gandelman, 2015. "A Comparison of Saving Rates: Micro Evidence from Seventeen Latin American and Caribbean Countries," IDB Publications (Working Papers) 90556, Inter-American Development Bank.
    3. Shahbaz, Muhammad & Nawaz, Kishwar & Arouri, Mohamed & Teulon, Frédéric & Uddin, Gazi Salah, 2013. "On the validity of the Keynesian Absolute Income hypothesis in Pakistan: An ARDL bounds testing approach," Economic Modelling, Elsevier, vol. 35(C), pages 290-296.
    4. García-Cicco, Javier & Kawamura, Enrique, 2015. "Dealing with the Dutch disease: Fiscal rules and macro-prudential policies," Journal of International Money and Finance, Elsevier, pages 205-239.
    5. repec:ipg:wpaper:2014-411 is not listed on IDEAS
    6. Carlos A. Ibarra, 2014. "Trade, investment, and capital flows:Mexico's macroeconomic adjustment to the Great Recession," Working Paper Series Sobre México 2014002, Sobre México. Temas en economía.

    More about this item

    Keywords

    Inflation; Mexico; Investment; Private savings; Taxes; private saving; Ricardian equivalence; dependency ratio; pension; domestic saving;

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