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Saving Rates in Latin American: Why Reformers Got It Wrong

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  • Nola Reinhardt

    () (Department of Economics, Smith College)

Abstract

This study examines the saving behavior of 18 Latin American countries in the 1976-2000 period compared to a group of 25 other middle-income developing countries. Over this period, Latin American saving rates have been consistently below the comparison group, despite extensive economic reforms undertaken in the region during the late 1980s/early 1990s designed to improve saving performance. While reformers expected lower inflation, increased deposit rates, and greater macroeconomic stability to stimulate increased saving, this has not occurred. Using panel data, we find that, unlike in the control group, these factors did not affect saving behavior in Latin America in the expected manner.

Suggested Citation

  • Nola Reinhardt, "undated". "Saving Rates in Latin American: Why Reformers Got It Wrong," Working Papers 2007-01, Smith College, Department of Economics.
  • Handle: RePEc:smt:wpaper:2007-01
    as

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    File URL: http://www.smith.edu/econ/workingpaper/pdfs/ReinhardtNola.pdf
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Gupta, Kanhaya L, 1987. "Aggregate Savings, Financial Intermediation, and Interest Rate," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 303-311, May.
    2. Gonzales Arrieta, Gerardo M., 1988. "Interest rates, savings, and growth in LDCs: An assessment of recent empirical research," World Development, Elsevier, vol. 16(5), pages 589-605, May.
    3. Masao Ogaki & Jonathan D. Ostry & Carmen M. Reinhart, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 38-71, March.
    4. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    6. Michael Gavin & Ricardo Hausmann & Ernesto Talvi, 1997. "Saving Behavior in Latin America: Overview and Policy Issues," IDB Publications (Working Papers) 6204, Inter-American Development Bank.
    7. Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
    8. World Bank, 2005. "World Development Indicators 2005," World Bank Publications, The World Bank, number 12426, October.
    9. Giovannini, Alberto, 1985. "Saving and the real interest rate in LDCs," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 197-217, August.
    10. Ramos, Joseph, 2000. "Policy Directions for the New Economic Model in Latin America," World Development, Elsevier, vol. 28(9), pages 1703-1717, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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