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Household saving in developing countries : first cross-country evidence


  • Schmidt-Hebbel, Klaus*Webb, Steven B.*Corsetti,


This study uses time-series of household data from eleven developing countries to test several hypotheses about saving behavior. Besides just widening the scope of information being used to test the hypotheses, the data set in this study has the advantage of a consistent definition across countries. With these data the authors test how household saving in developing countries responds to the level of per capita disposable income, the rate of growth of disposable income and its deviation from trend, real liquid wealth at the start of the period, the real interest rate, the inflation rate, foreign saving, government transfers to households, and some demographic variables. The results show that income and wealth variables affect saving strongly and in ways consistent with standard theories. Inflation and the interest rate do not show clear effects on saving, which is also consistent with their theoretical ambiguity. Foreign saving and monetary wealth have strong negative effects on household saving, indicating the importance of liquidity constraints in developing countries.

Suggested Citation

  • Schmidt-Hebbel, Klaus*Webb, Steven B.*Corsetti,, 1991. "Household saving in developing countries : first cross-country evidence," Policy Research Working Paper Series 575, The World Bank.
  • Handle: RePEc:wbk:wbrwps:575

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    References listed on IDEAS

    1. Andrei A. Levchenko & Logan Lewis & Linda L. Tesar, 2009. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," Working Papers 592, Research Seminar in International Economics, University of Michigan.
    2. Nicolas Berman and Philippe Martin, 2010. "The Vulnerability Of Sub-Saharan Africa To The Financial Crisis: The Case Of Trade," RSCAS Working Papers 2010/15, European University Institute.
    3. Bown, Chad P., 2009. "The global resort to antidumping, safeguards, and other trade remedies amidst the economic crisis," Policy Research Working Paper Series 5051, The World Bank.
    4. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    5. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2016. "Trade and the Global Recession," American Economic Review, American Economic Association, vol. 106(11), pages 3401-3438, November.
    6. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
    7. Malouche, Mariem, 2009. "Trade and trade finance developments in 14 developing countries post September 2008 - a World Bank survey," Policy Research Working Paper Series 5138, The World Bank.
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