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Chinese Saving Dynamics: The Impact of GDP Growth and Dependent Share

Author

Listed:
  • Carl Bonham

    (UHERO, University of Hawaii at Manoa)

  • Calla Wiemer

    (US-China Institute, University of Southern California)

Abstract

China's national saving rate rose rapidly in the 2000s after declining through the late 1990s. These dynamics are not readily explained by the precautionary motive, the institutional distribution of income, or reform related processes in general. Rather, we find a compelling explanation lies with GDP growth fluctuations and demographic shifts. We estimate a vector autoregressive model for the period 1978-2008, then generate in-sample simulations that successfully replicate the 2000s run-up in the saving rate. Our out of sample forecasts show the saving rate dropping in the 2010s as the dependent share falls and GDP growth moderates.

Suggested Citation

  • Carl Bonham & Calla Wiemer, 2010. "Chinese Saving Dynamics: The Impact of GDP Growth and Dependent Share," Working Papers 2010-11R, University of Hawaii Economic Research Organization, University of Hawaii at Manoa, revised 11 Jan 2012.
    • Handle: RePEc:hae:wpaper:2010-11r
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Real Reason for China's Unbalanced Growth (Orlik Review Addendum)
      by calla.wiemer@acaes.us (Calla Wiemer) in Asia Economics Blog on 2020-07-15 13:27:11

    Citations

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    Cited by:

    1. Rahmanda Muhammad Thaariq & Arif Anindita & Hafizha Dea Iftina, 2021. "The Internet Miracle: The Impact Of Internet Access On Household Saving In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 255-282, June.
    2. Alhaj-Yaseen, Yaseen S. & Barkoulas, John T. & Ouandlous, Arav, 2020. "Liberalization and asymmetric information flow dynamics in the Chinese equity markets," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).
    3. Manger, Mark S. & Matthews, J. Scott, 2021. "Knowing when to splurge: Precautionary saving and Chinese-Canadians," Journal of Asian Economics, Elsevier, vol. 76(C).
    4. Gu, Xinhua & Tam, Pui Sun & Li, Guoqiang & Zhao, Qingbin, 2020. "An alternative explanation for high saving in China: Rising inequality," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 1082-1094.
    5. Chang, Xiao & An, Tongliang & Tam, Pui Sun & Gu, Xinhua, 2020. "National savings rate and sectoral income distribution: An empirical look at China," China Economic Review, Elsevier, vol. 61(C).
    6. Hassan B. Ghassan & Hassan R. Alhajhoj & Faruk Balli, 2022. "Bi-demographic and current account dynamics using SVAR model: evidence from Saudi Arabia," Economic Change and Restructuring, Springer, vol. 55(3), pages 1327-1363, August.
    7. Tingying Chen & Haitian Lu & Rong Chen & Lina Wu, 2021. "The Impact of Marketization on Sustainable Economic Growth—Evidence from West China," Sustainability, MDPI, vol. 13(7), pages 1-24, March.
    8. Xinhua Gu & Bihong Huang & Pui Sun Tam & Yang Zhang, 2015. "Inequality and Saving: Further Evidence from Integrated Economies," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 15-30, February.
    9. Mark S. Manger & J. Scott Matthews, 2021. "Knowing When to Splurge: Precautionary Saving and Chinese-Canadians," Papers 2108.00519, arXiv.org.
    10. Ghassan, Hassan & Alhajhoj, Hassan R. & Balli, Faruk, 2018. "Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Arabia," MPRA Paper 93013, University Library of Munich, Germany, revised 01 Feb 2019.
    11. Hassan Belkacem Ghassan & Hassan Rafdan Al-Hajhoj & Faruk Balli, 2019. "Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Economy," Working Papers hal-01742574, HAL.
    12. Gu, Xinhua & Tam, Pui Sun, 2013. "The saving–growth–inequality triangle in China," Economic Modelling, Elsevier, vol. 33(C), pages 850-857.
    13. Hassan B. Ghassan & Hassan R. Al-Hajhoj & Faruk Balli, 2018. "Bi-Demographic Changes and Current Account using SVAR Modeling," Papers 1803.11161, arXiv.org, revised Mar 2019.

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    More about this item

    Keywords

    Chinese Saving Dynamics; GDP Growth; Dependent Share; Savings Rate;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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