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Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison

  • Reinhart, Carmen
  • Ogaki, Masao
  • Ostry, Jonathan

The relationship between real interest rates, saving, and gre is a cen tral issue in development economics. Using iflaCrOecOnOFflic data for c cross-section of countries, we estimate a model in %i’hlc/I 1/ic intertemporal elasticity of subsutution varies with the level of wealth. The estimated pa ranieters are used to calculate, in the context of a simple endogenous g rowt/i model, the responsiveness of saving to real interest rate c/ian ges for countries at differing stages of developmnent. The hypothesis f/mat the saving rate, and its sensitivity to time interest rate, are a risinq function of income finds strong empirical support.

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File URL: https://mpra.ub.uni-muenchen.de/6978/1/MPRA_paper_6978.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6978.

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Date of creation: Mar 1996
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Publication status: Published in IMF Staff Papers 1.43(1996): pp. 38-71
Handle: RePEc:pra:mprapa:6978
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