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Determinants of Lower Saving Rates in the USA: Prospects and Implications

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  • Magda Kandil

Abstract

The recent episode of the financial meltdown has drawn attention to global imbalances, raising concerns about inability to sustain low saving rates in the USA. The objective of this paper is to shed light on the downward trend in household savings in the USA starting in the mid‐1990s. In addition to the theoretical determinants of household savings, the paper's innovation is in tracing the effect of the widely tracked consumer sentiment index on savings. Applying the dynamic autoregressive distributed lag model with bounds testing approach, the evidence confirms the relevance of the consumer sentiment index as an important factor that affects household savings, both in the short‐run and long‐run.

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  • Magda Kandil, 2015. "Determinants of Lower Saving Rates in the USA: Prospects and Implications," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 20(4), pages 328-340, October.
    • Handle: RePEc:wly:ijfiec:v:20:y:2015:i:4:p:328-340
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    Cited by:

    1. Błoch Wiktor, 2023. "What drives the savings rate in middle -income countries?," Economics and Business Review, Sciendo, vol. 9(4), pages 56-73, December.
    2. Aneta M. Klopocka & Rumiana Gorska, 2021. "Forecasting Household Saving Rate with Consumer Confidence Indicator and its Components: Panel Data Analysis of 14 European Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 874-898.

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