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Saving Rates in Latin American: Why Reformers Got It Wrong

  • Nola Reinhardt


    (Department of Economics, Smith College)

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    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.

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    File Function: First version, 2007
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    Paper provided by Smith College, Department of Economics in its series Working Papers with number 2007-01.

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    Handle: RePEc:smt:wpaper:2007-01
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    1. Giovannini, Alberto, 1985. "Saving and the real interest rate in LDCs," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 197-217, August.
    2. Reinhart, Carmen & Ogaki, Masao & Ostry, Jonathan, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," MPRA Paper 6978, University Library of Munich, Germany.
    3. Ramos, Joseph, 2000. "Policy Directions for the New Economic Model in Latin America," World Development, Elsevier, vol. 28(9), pages 1703-1717, September.
    4. 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.
    5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    6. repec:wbk:wbpubs:12426 is not listed on IDEAS
    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. Gupta, Kanhaya L, 1987. "Aggregate Savings, Financial Intermediation, and Interest Rate," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 303-11, May.
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