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What determines national savings? : a case study of Korea and the Philippines

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  • Nam, Sang-Woo

Abstract

This analysis conducts dynamic simulations to determine how major variables interact across sectors. Changes in growth performance, more than anything else, were responsible for the sharp drops in aggregate savings in 1980-82 in Korea and in 1984-85 in the Philippines. In Korea, per capita income growth explained most of the changes in the national savings ratio during the last two decades. Savings in Korea are also significantly affected by interest rate policy. In the Philippines, by contrast, a higher interest rate had a slightly negative effect - because the positive effect on household savings was more than offset by the negative effect on corporate and government savings. The policy implications of these findings seem obvious. Any adjustment policy packages designed to curb inflation and improve the balance of payments should also be designed to encourage growth - which is needed to encourage savings and thus investment.

Suggested Citation

  • Nam, Sang-Woo, 1989. "What determines national savings? : a case study of Korea and the Philippines," Policy Research Working Paper Series 205, The World Bank.
    • Handle: RePEc:wbk:wbrwps:205
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    References listed on IDEAS

    as
    1. Papanek, Gustav F, 1972. "The Effect of Aid and other Resource Transfers on Savings and Growth in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 82(327), pages 934-950, September.
    2. Williamson, Jeffrey G., 1979. "Why do Koreans save so little?," Journal of Development Economics, Elsevier, vol. 6(3), pages 343-362, August.
    3. Giovannini, Alberto, 1985. "Saving and the real interest rate in LDCs," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 197-217, August.
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    Cited by:

    1. Faini, Riccardo, 1991. "The macroeconomics of the public sector deficit : the case of Morocco," Policy Research Working Paper Series 631, The World Bank.

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