Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-28T01:39:02.007Z Has data issue: false hasContentIssue false
  • English
  • Français

Transitional dynamics of the saving rate and economic growth

Published online by Cambridge University Press:  24 August 2021

Markus Brueckner ,
Tomoo Kikuchi  and
George Vachadze
Markus Brueckner
Affiliation:
Research School of Economics, Australian National University, Canberra, Australia
Tomoo Kikuchi*
Affiliation:
Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, Japan
George Vachadze
Affiliation:
Department of Economics, College of Staten Island, City University of New York, New York, The United States of America
*
*Corresponding author: Tomoo Kikuchi. Email: [email protected]
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

We estimate the relationship between GDP per capita growth and the growth rate of the national saving rate using a panel of 130 countries over the period 1960–2017. We find that GDP per capita growth increases (decreases) the growth rate of the national saving rate in poor countries (rich countries), and a higher credit-to-GDP ratio decreases the national saving rate as well as the income elasticity of the national saving rate. We develop a model with a credit constraint to explain the growth-saving relationship by the saving behavior of entrepreneurs at both the intensive and extensive margins. We further present supporting evidence for our theoretical findings by utilizing cross-country time series data of the number of new businesses registered and the corporate saving rate.

Keywords

Economic growthsaving ratecredit constraintsentrepreneursD9E2O1
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 2 , March 2023 , pp. 482 - 505
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Copyright
© Cambridge University Press 2021

References

Acemoglu, D., Finkelstein, A., and Notowidigdo, M. J. (2013) Income and health spending: Evidence from oil price shocks. Review of Economics and Statistics 95, 1079–1095.CrossRefGoogle Scholar
Aghion, P. (1995) A trickle-down theory of growth and development with debt overhang. Review of Economic Studies 64, 131–172.Google Scholar
Aiyagari, S. R. (1994) Uninsured idiosyncratic risk and aggregate saving. The Quarterly Journal of Economics 109, 659–684.CrossRefGoogle Scholar
Antràs, P. (2001) Transitional dynamics of the savings rate in the neoclassical growth model. mimeo.Google Scholar
Banerjee, A. V. and Newman, A. F. (1993) Occupational choice and the process of Development. Journal of Political Economy 101, 274–298.CrossRefGoogle Scholar
Bewley, T. (1986) Stationary monetary equilibrium with a continuum of independently fluctuating consumers. In Hildenbrand, W. and Mas-Colell, W. (eds.), Contributions to Mathematical Economics in Honor of Gérard Debreu pp. 79–102. Amsterdam: North-Holland.Google Scholar
Brückner, M., Chong, A., and Gradstein, M. (2012a) Estimating the permanent income elasticity of government expenditures: Evidence on Wagner’s law based on oil price shocks. Journal of Public Economics 96, 1025–1035.CrossRefGoogle Scholar
Brückner, M., Ciccone, A. and Tesei, A. (2012b) Oil price shocks, income, and democracy. Review of Economics and Statistics 94, 389–399.CrossRefGoogle Scholar
Brueckner, M., Kikuchi, T. and Vachadze, G. (2021) Transitional Dynamics of the Saving Rate and Economic Growth. arXiv:2012.15435v3CrossRefGoogle Scholar
Buera, F. J. (2009) A dynamic model of entrepreneurship with borrowing constraints: Theory and evidence. Annals of Finance 5, 443–464.CrossRefGoogle Scholar
Buera, J. F. and Shin, Y. (2013) Financial frictions and the persistence of history: A quantitative exploration. Journal of Political Economy 121, 221–272.CrossRefGoogle Scholar
Chen, K., İmrohoroğlu, A. and İmrohoroğlu, S. (2006) The Japanese saving rate. American Economic Review 96, 1850–1858.CrossRefGoogle Scholar
Chen, P., Karabarbounis, L. and Neiman, B. (2017) The global rise of corporate saving. Journal of Monetary Economics 89, 1–19.CrossRefGoogle Scholar
Christiano, J. L. (1989) Understanding Japan’s saving rate: The reconstruction hypothesis. Federal Reserve Bank of Minneapolis Quarterly Review 13, 10–25.Google Scholar
Deaton, A. (1991) Saving and liquidity constraints. Econometrica 59, 1221–1248.CrossRefGoogle Scholar
Galor, O. and Zeira, J. (1993) Income distribution and macroeconomics. Review of Economic Studies 60, 35–52.CrossRefGoogle Scholar
Ghatak, M., Morelli, M. and Sjöström, T. (2001) Occupational choice and dynamic incentives. Review of Economic Studies 68, 781–810.CrossRefGoogle Scholar
Hamilton, D. J. (2009) Understanding crude oil prices. The Energy Journal 30, 179–206.CrossRefGoogle Scholar
Heston, A., Summers, R. and Aten, B. (2011) Penn World Table Version 7.0, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania.Google Scholar
Hillebrand, M., Kikuchi, T., and Sakuragawa, M. (2018) Bubbles and crowding-in of capital via a savings glut. Macroeconomic Dynamics 22, 1238–1266.CrossRefGoogle Scholar
Jappelli, T. and Pagano, M. (1994) Saving, growth, and liquidity constraints. The Quarterly Journal of Economics 109, 83–109.CrossRefGoogle Scholar
Kikuchi, T. and Stachurski, J. (2009) Endogenous inequality and fluctuations in a two-country model. Journal of Economic Theory 144, 1560–1571.CrossRefGoogle Scholar
Kikuchi, T., Stachurski, J. and Vachadze, G. (2018) Volatile capital flows and financial integration: The role of moral hazard. Journal of Economic Theory 176, 170–192.CrossRefGoogle Scholar
Kikuchi, T. and Vachadze, G. (2015) Financial liberalization: Poverty trap or chaos. Journal of Mathematical Economics 59, 1–9.CrossRefGoogle Scholar
Kikuchi, T. and Vachadze, G. (2018) Minimum investment requirement, financial market imperfection and self-fulfilling belief. Journal of Evolutionary Economics 28, 305–332.CrossRefGoogle Scholar
King, G. R. and Rebelo, S. T. (1993) Transitional dynamics and economic growth in the neoclassical model. American Economic Review 83, 908–931.Google Scholar
Laitner, J. (2000) Structural change and economic growth. Review of Economic Studies 67, 545–561.CrossRefGoogle Scholar
Levine, R. (1997) Financial development and economic growth: Views and agenda. Journal of Economic Literature 35, 688–726.Google Scholar
Levine, K. D. and Zame, W. R. (2002) Does market incompleteness matter? Econometrica 70, 1805–1839.CrossRefGoogle Scholar
Lloyd-Ellis, H. and Bernhardt, D. (2000) Enterprise, inequality and economic development. Review of Economic Studies 67, 147–168.CrossRefGoogle Scholar
Loayza, N., Schmidt-Hebbel, K. and Servén, L. (2000) What drives private saving across the world? Review of Economics and Statistics 82, 165–181.CrossRefGoogle Scholar
Matsuyama, K. (2000) Endogenous inequality. Review of Economic Studies 67, 743–759.CrossRefGoogle Scholar
Matsuyama, K. (2004) Financial market globalization, symmetry-breaking, and endogenous inequality of nations. Econometrica 72, 853–884.CrossRefGoogle Scholar
Pesaran, M. H. and Smith, R. (1995) Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics 68, 79–113.CrossRefGoogle Scholar
Piketty, T. (1997) The dynamics of the wealth distribution and the interest rate with credit rationing. Review of Economic Studies 64, 173–189.CrossRefGoogle Scholar
The World Bank (2012) World Development Indicators 2012, Washington, DC: Development Data Group, The World Bank.Google Scholar
The World Bank (2020) World Development Indicators 2020, Washington, DC: Development Data Group, The World Bank.Google Scholar
Supplementary material: PDF

Brueckner et al. supplementary material

Brueckner et al. supplementary material

Download Brueckner et al. supplementary material(PDF)
PDF 217 KB