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The Pattern of Household Savings during a Hyperinflation The Case of Urban China in the Late 1980s

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This paper presents evidence on household savings in urban regions of the Chinese provinces Sichuan and Liaoning based on data from the State Statistical Bureau's Urban Household Survey for the late 1980s. In this period the Chinese economy was subject to extensive reforms that resulted in rapid economic growth followed by extremely high inflation rates in 1988 and 1989. The high inflation rates gave the households strong motives to switch from financial savings to purchase of consumer durables, which also appear to be consistent with the structure of the observed data. By providing empirical evidence on the relative importance of savings by lower, middle and upper income groups for single-child families and for all households, this study also demonstrates that the savings decisions depend heavily on the level of household income. Single-child families are focused, not only because of its growing dominance in the current Chinese society, but also to control for the effect of demographic disparities.

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  • Rolf Aaberge & Yu Zhu, 1998. "The Pattern of Household Savings during a Hyperinflation The Case of Urban China in the Late 1980s," Discussion Papers 217, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:217
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    1. Angus S. Deaton & Christina Paxson, 1994. "Saving, Growth, and Aging in Taiwan," NBER Chapters, in: Studies in the Economics of Aging, pages 331-362, National Bureau of Economic Research, Inc.
    2. Yingyi Qian, 1988. "Urban and Rural Household Saving in China," IMF Staff Papers, Palgrave Macmillan, vol. 35(4), pages 592-627, December.
    3. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
    4. Pudney, Stephen, 1993. "Income and Wealth Inequality and the Life Cycle: A Non-parametric Analysis for China," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(3), pages 249-276, July-Sept.
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    Cited by:

    1. Aaberge, Rolf & Liu, Kai & Zhu, Yu, 2017. "Political uncertainty and household savings," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 154-170.
    2. Ismail, Aisha & Rashid, Kashif, 2013. "Determinants of household saving: Cointegrated evidence from Pakistan (1975–2011)," Economic Modelling, Elsevier, vol. 32(C), pages 524-531.
    3. Atella, Vincenzo & Brugiavini, Agar & Pace, Noemi, 2015. "The health care system reform in China: Effects on out-of-pocket expenses and saving," China Economic Review, Elsevier, vol. 34(C), pages 182-195.
    4. Yu Zhu & Zhongmin Wu & Meiyan Wang & Yang Du & Fang Cai, 2011. "Do Migrants Really Save More? Understanding the Impact of Remittances on Savings in Rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 48(5), pages 654-672, June.
    5. Gustafsson, Björn & LI, Shi & Sato, Hiroshi, 2014. "Data for studying earnings, the distribution of household income and poverty in China," China Economic Review, Elsevier, vol. 30(C), pages 419-431.
    6. Meng, Xin, 2003. "Unemployment, consumption smoothing, and precautionary saving in urban China," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 465-485, September.
    7. Zhu, Yu, 2002. "Latent total consumption expenditure, unobservable individual preferences and panel data," Economic Modelling, Elsevier, vol. 19(2), pages 277-293, March.

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    More about this item

    Keywords

    Income; savings; consumer durables.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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