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Private Saving Determinants in Portugal

Author

Listed:
  • Garcia Maria Teresa Medeiros
  • Rodrigues Pedro Nuno Louro Silvestre
  • Nunes Francisco

    (ISEG, Lisbon School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal)

Abstract

The combination of projected increases in the expenditure of the public pension scheme and low rates of private saving constitutes a policy challenge in Portugal. Policy debate embrace pension reform and the redoubling of household saving efforts. The purpose of this paper is to revisit the determinants of household saving in order to inform the debate with research findings, employing a constructed public pension wealth variable in a life cycle consumption/saving model pioneered by Feldstein (1974). We use time series techniques and data from 1983 to 2012. The findings show that an increase in the public pension wealth variable does not boost saving suggesting that concerns with saving to cope with the length of the life expectancy at the retirement age are not enough to reject the view that the public pension benefit is a substitute for household wealth. The other results are consistent with expectations: increases in disposable income positively impact saving; there is a significant negative propensity to save out of household wealth increase; and improvement in the government balance engender significant saving decrease.

Suggested Citation

  • Garcia Maria Teresa Medeiros & Rodrigues Pedro Nuno Louro Silvestre & Nunes Francisco, 2019. "Private Saving Determinants in Portugal," Mediterranean Journal of Social Sciences, Sciendo, vol. 10(2), pages 57-68, March.
    • Handle: RePEc:vrs:mjsosc:v:10:y:2019:i:2:p:57-68:n:6
    DOI: 10.2478/mjss-2019-0023
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