Neglected Heterogeneity and Dynamics in Cross-Country Savings Regressions

September 1, 1999

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Neglected Heterogeneity and Dynamics in Cross-Country Savings Regressions, (USA: International Monetary Fund, 1999) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the extent to which conclusions of cross-country studies of private savings are robust to allowing for the possible heterogeneity of savings behavior across countries and the inclusion of dynamics. It shows that neglecting heterogeneity and dynamics can lead to misleading inferences about the key determinants of savings behavior. The results indicate that among the many variables considered in the literature only the fiscal variables—the general government surplus as a proportion of GDP and the ratio of government consumption to GDP—are important determinants of private savings rates in the industrial countries in the post-World War II period.

Subject: Expenditure, Financial services, Government consumption, Income, National accounts, Private savings, Real interest rates

Keywords: Coefficient estimate, Country regression, Cross-country studies, Dynamics, Government consumption, Income, Long-run coefficient, MG estimate, Mover accent, OECD, Panel data, Panel data models, Private savings, Real interest rates, Ricardian effect, Saving behavior, Savings rate, Slope coefficient, Slope heterogeneity, Wealth-GDP ratio, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/128
Stock No:

WPIEA1281999
ISBN:

9781451855036
ISSN:

1018-5941

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