Journal Article

Chinese saving dynamics: the impact of GDP growth and the dependent share

Carl Bonham and Calla Wiemer

in Oxford Economic Papers

Volume 65, issue 1, pages 173-196
Published in print January 2013 | ISSN: 0030-7653
Published online April 2012 | e-ISSN: 1464-3812 | DOI: https://dx.doi.org/10.1093/oep/gps020
Chinese saving dynamics: the impact of GDP growth and the dependent share

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  • Macroeconomics: Consumption, Saving, Production, Employment, and Investment
  • Multiple or Simultaneous Equation Models; Multiple Variables
  • Economywide Country Studies
  • Economic Development

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China's national saving rate rose rapidly in the 2000s after declining through the late 1990s. These dynamics are not readily explained by the precautionary motive, the institutional distribution of income, or reform related processes in general. Rather, we find a compelling explanation lies with GDP growth fluctuations and demographic shifts. We estimate a vector autoregressive model for the period 1978–2008, then generate in-sample simulations that successfully replicate the 2000s run-up in the saving rate. Our out of sample forecasts project a decline in the saving rate in the 2010s as the dependent share falls and GDP growth moderates.

Keywords: C32; E21; O11; O53

Journal Article.  9500 words.  Illustrated.

Subjects: Macroeconomics: Consumption, Saving, Production, Employment, and Investment ; Multiple or Simultaneous Equation Models; Multiple Variables ; Economywide Country Studies ; Economic Development

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