Saving and real interest rates in developing countries

Reinhart, Carmen and Ostry, Jonathan (1995): Saving and real interest rates in developing countries. Published in: Finance and Development , Vol. 32, No. 4 (December 1995): pp. 16-18.

Abstract

Raising real interest rates has been cited as a way to increase private saving,and thus provide the resources for growth. But this may not be a viable approach in the poorest developing countries in which most people live at subsistence level. In these situations, consumption is not very responsive to fluctuations in real interest rates and financial liberalization my not be the catalyst to higher higher saving rates.

• Item Type: MPRA Paper
• Language: English
• Keywords: saving development liberalization interest rates
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis

References

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

Ostry, Jonathan and Carmen M. Reinhart “Private Saving and Terms of Trade Shocks: Evidence from Developing Countries,” IMF Staff Papers, Vol. 39 No. 3, September 1992, 495-517.