Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison

Reinhart, Carmen and Ogaki, Masao and Ostry, Jonathan (1996): Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. Published in: IMF Staff Papers , Vol. 43, No. 1 (March 1996): pp. 38-71.

Abstract

The relationship between real interest rates, saving, and gre is a cen tral issue in development economics. Using iflaCrOecOnOFflic data for c cross-section of countries, we estimate a model in %i’hlc/I 1/ic intertemporal elasticity of subsutution varies with the level of wealth. The estimated pa ranieters are used to calculate, in the context of a simple endogenous g rowt/i model, the responsiveness of saving to real interest rate c/ian ges for countries at differing stages of developmnent. The hypothesis f/mat the saving rate, and its sensitivity to time interest rate, are a risinq function of income finds strong empirical support.

• Item Type: MPRA Paper
• Language: English
• Keywords: low income, subsistence consumption, saving, real interest rates
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; F - International Economics > F3 - International Finance; F - International Economics > F1 - Trade