Saving Behavior in Low and Middle-Income Developing Countries : A Comparison

Author/Editor:

Masao Ogaki ; Jonathan David Ostry ; Carmen Reinhart

Publication Date:

January 1, 1995

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:

The impact of changes in real interest rates on saving and growth is a central issue in development economics. According to one familiar view, a financial liberalization program which increases real interest rates should encourage saving, thereby boosting investment and growth. While such liberalizations have indeed typically succeeded in raising real interest rates, their impact on private saving has been mixed. This paper uses macroeconomic data for a sample of countries with diverse income levels to estimate a model in which the intertemporal elasticity of substitution varies with the level of wealth. The estimated parameters are then used to calculate, in the context of a simple endogenous growth model, the responsiveness of saving to real interest rate changes for countries at differing stages of development.

Series:

Working Paper No. 95/3

Subject:

Notes:

Also published in Staff Papers, Vol. 43, No. 1, March 1996.

English

Publication Date:

January 1, 1995

ISBN/ISSN:

9781451841848/1018-5941

Stock No:

WPIEA0031995

Format:

Paper

Pages:

38

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