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Why are Saving Rates of Urban Households in China Rising?

Author/Editor: Chamon, Marcos | Prasad, Eswar
Authorized for Distribution: June 1, 2008
Electronic Access: Free Full Text (PDF file size is 678KB)
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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: From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to ΒΌ of disposable income. We use household-level data to explain the postponing of consumption despite rapid income growth. Tracing cohorts over time indicates virtually no consumption smoothing over the life cycle. Saving rates have increased across all demographic groups, although the age-profile of savings has an unusual U-shaped pattern, with saving rates being the highest among the youngest and oldest households in recent years. These patterns are best explained by the rising private burden of expenditures on housing, education, and health care.
 
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Series: Working Paper No. 08/145
Subject(s): China, People's Republic of | Private savings | Income | Economic growth | Private consumption
Author's keyword(s): household savings | age and cohort profiles of savings | borrowing constraints | precautionary savings financial development | demographics
 
English  
    Published:   June 1, 2008        
            Format:   Paper
    Stock No:   WPIEA2008145   Pages:   49
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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