## Targets, Interest Rates, and Household Saving in Urban China

_IMF Working Papers, October 1, 2011_

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## Bibliographic details
- Authors: Malhar S Nabar
- Published: October 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463904258.001

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### Overview
- Study period: 1996-2009.
- Sample: panel of China's provinces.
- Observed change: urban household saving rates increased from 19 percent of disposable income to 30 percent of disposable income.
- Paper length: 29 pages.
- Series: Working Paper No. 2011/223.
- DOI: https://doi.org/10.5089/9781463904258.001

### Main findings
- The increase in urban saving rates is negatively associated with the decline in real interest rates over 1996-2009.
- The negative association implies households exhibit target saving behavior:
  - When the return to saving declines, it becomes more difficult to meet a target and households increase saving out of current disposable income to compensate.
  - When the return to saving increases, it becomes easier to meet a target and households lower their saving out of current disposable income.
- Results are robust across specifications and to the inclusion of additional variables.

### Empirical evidence and robustness
- Panel analysis across provinces over 1996-2009 links real interest rate movements to urban household saving rate changes.
- Robustness: findings hold across alternative model specifications and after adding additional control variables.

### Policy implications
- A main policy implication is that an increase in real deposit rates may help lower household saving and boost domestic consumption.

*Source: "Targets, Interest Rates, and Household Saving in Urban China", Malhar S Nabar, IMF Working Papers 2011, 223 (2011), accessed 6/30/2026, DOI: https://doi.org/10.5089/9781463904258.001*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/targets-interest-rates-and-household-saving-in-urban-china-25260_