Saving and growth: a reinterpretation

Saving and growth: a reinterpretation*

We examine the relationship between income growth and saving using both cross-country and household data. At the aggregate level, we find that growth Granger causes saving, but saving does not Granger cause growth. Using household data, we find that households with predictably higher income growth save more than households with predictably low growth. We argue that standard permanent income mod...

Saving, Investment, and Growth: A Causality Test

In the second half of the last century, tremendous efforts were devoted to identifying sources of economic success by a few countries and causes of failure by most. In this process a voluminous literature ranging from the neo-classical to Marxist, neo-Marxist, and dependency theories has been developed to answer the question of disparity among different countries of the north vis-à-vis those of...

saving, investment, and growth: a causality test

in the second half of the last century, tremendous efforts were devoted to identifying sources of economic success by a few countries and causes of failure by most. in this process a voluminous literature ranging from the neo-classical to marxist, neo-marxist, and dependency theories has been developed to answer the question of disparity among different countries of the north vis-à-vis those of...

Saving and Growth

Growth and Saving among Individuals and Households

The lifecycle theory of saving and consumption predicts that changes in an economy’s rate of economic growth will affect its aggregate saving rate by changing the lifetime resources of younger people relative to older people. However, studies that track the saving behavior of cohorts of household heads over time as they age have yielded estimates of age-saving profiles that are too flat for gro...