Income Uncertainty and Household Savings in China PDF Download
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Author: Mr.Marcos Chamon
Publisher: International Monetary Fund
ISBN: 1455211702
Category : Business & Economics
Languages : en
Pages : 36
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Book Description
China’s household saving rate has increased markedly since the mid-1990s and the age-savings profile has become U-shaped. We find that rising income uncertainty and pension reforms help explain both of these phenomena. Using a panel of Chinese households covering the period 1989-2006, we document that strong average income growth has been accompanied by a substantial increase in income uncertainty. Interestingly, the permanent variance of household income remains stable while it is the transitory variance that rises sharply. A calibration of a buffer-stock savings model indicates that rising savings rates among younger households are consistent with rising income uncertainty and higher saving rates among older households are consistent with a decline in the pension replacement ratio for those retiring after 1997. We conclude that rising income uncertainty and pension reforms can account for over half of the increase in the urban household savings rate in China since the mid-1990s as well as the U-shaped age-profile of savings.
Author: Mr.Marcos Chamon
Publisher: International Monetary Fund
ISBN: 1455211702
Category : Business & Economics
Languages : en
Pages : 36
Get Book Here
Book Description
China’s household saving rate has increased markedly since the mid-1990s and the age-savings profile has become U-shaped. We find that rising income uncertainty and pension reforms help explain both of these phenomena. Using a panel of Chinese households covering the period 1989-2006, we document that strong average income growth has been accompanied by a substantial increase in income uncertainty. Interestingly, the permanent variance of household income remains stable while it is the transitory variance that rises sharply. A calibration of a buffer-stock savings model indicates that rising savings rates among younger households are consistent with rising income uncertainty and higher saving rates among older households are consistent with a decline in the pension replacement ratio for those retiring after 1997. We conclude that rising income uncertainty and pension reforms can account for over half of the increase in the urban household savings rate in China since the mid-1990s as well as the U-shaped age-profile of savings.
Author: Yu-Chun Regina Chang
Publisher:
ISBN:
Category :
Languages : en
Pages : 378
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Book Description
Author: Mr.Joaquim Vieira Ferreira Levy
Publisher: International Monetary Fund
ISBN: 1451855745
Category : Business & Economics
Languages : en
Pages : 32
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Book Description
The household saving ratio in France has undergone very sharp changes over the past two decades, falling dramatically in the first part of the 1980s before rising in more recent years. This paper emphasizes two factors in the evolution of private saving in France. The first relates to perceptions of household income growth and uncertainty, which are likely to have been affected by deteriorating labor market conditions, and which may therefore help to account for the recent increase in saving. The second factor relates to financial deregulation which may have lowered saving and increased its sensitivity to interest rate changes. It is argued that both factors have played some role in the evolution of French household saving.
Author: L. J. Irvine
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Henry William Kinnucan
Publisher:
ISBN:
Category :
Languages : en
Pages : 396
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Book Description
Author: Ian Irvine
Publisher: Department of Economics, Concordia University
ISBN:
Category : Finance, Personal
Languages : en
Pages : 38
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Book Description
Author: Mr. Kamil Dybczak
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 50
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Book Description
The paper looks into the puzzle of low household savings in three Southern European (SE3) countries – Cyprus, Greece, and Portugal. Building on the household saving drivers literature, we employ cross-country micro-level data and investigate the key saving patterns, examining their heterogeneity across households in SE3 countries relative to the EA average. The results confirm the prominent role of income, along with interest rate, inflation, fiscal balance, and debt in shaping household savings in SE3 countries. Quantile regressions employed to analyze saving behavior across the distribution of households suggest that households with lower savings tend to see their savings dip (or dissavings rise) more-than-proportionately with shocks to income, interest rate, inflation, and government balance. Our policy simulations across the distribution of households suggest that targeted rather than universal policy intervention could improve household savings, especially of the most vulnerable ones.
Author: Mr.Sam Ouliaris
Publisher: International Monetary Fund
ISBN: 1484360982
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
This paper develops a time series model for aggregate consumption to predict the U.S. personal saving rate. It then uses the model to test whether there has been a structural break in consumption behavior because of the 2008 financial crisis. Before the crisis, the personal saving rate was trending downwards. However, in 2008 there was a significant rise in the saving rate that continued until the end of 2012, suggesting a permanent change in household behavior. To assess this issue formally, the unknown parameters of the model are estimated using data for 1961Q1-2007Q4, a period which precedes the crisis. The model is then used to predict the saving rate from 2008Q1 onwards and to assess whether the rise in the saving rate after 2008 was due to sizable, but transitory, income/wealth shocks or to changes in the underlying elasticities between saving and its determinants (hence structural). The statistical evidence suggests there was no structural break in the household saving behavior, implying that the rise in the saving rate during 2008-2012 was caused by the negative shocks to income, employment and wealth. This result explains why the saving rate resumed its decline in 2013, as real disposable income, employment and net worth recovered. Assuming that the real growth in these determinants remains strong, the estimated model predicts continued negative pressures on the current account deficit and further external imbalances attributable to the U.S. household sector.
Author: Kersten Kevin Stamm
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 260
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Book Description
Most households in the US do not own interest bearing assets, a direct contradiction of the common representative agent assumption of New Keynesian models. Using the Survey of Consumer Finances, I document precautionary saving in the economy with a new measure, checking account balance to income ratio. I find that (a) an augmented medium-scale NK model with a precautionary saving motive can match this ratio well; (b) precautionary saving lowers the relative importance of the direct effect of monetary policy; (c) a NK model with precautionary saving relies less on nominal and real frictions; (d) the precautionary saving mechanism leads to lower inflation during economic recoveries; and (e) an extension with downward rigid wages is able to produce an asymmetric response of the economy to monetary policy in line with the recent literature. Given the central role of the mechanism linking saving to income risk for these results and the lack of clear empirical evidence for this relationship, using data on consumption, income and employment growth across 28 MSA from the Consumer Expenditure Survey, I document with an instrumental variable strategy that the consumption-income ratio is positively correlated with employment growth and increases by 0.4 percentage points in response to a one percentage point increase in employment growth. Based on this estimate, a sizable fraction of 42% of the increase in saving between 2006 and 2010 can be attributed to negative employment growth.
Author: Ian Irvine
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Several models of economic behavior currently compete for an explanation of individual wealth accumulation and savings patterns. In this paper we focus in particular upon the role of income uncertainty, and the role played by a retirement period, during which time expected earnings are zero. We find that income uncertainty can alter savings patterns over the lifecycle significantly, with the greatest influence on the wealth of young individuals. However, its influence on the aggregate stock of wealth is less than earlier theoretical work indicates.
