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Life cycles, oil cycles, or financial reforms? The growth in private savings rates in Indonesia

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  • Johansson, Sara

    (Department of Economics)

Abstract

What goes steady with private savings? This paper investigates reasons for the sustained growth in private savings in Indonesia since 1970, in a period characterized by economic growth, demographic changes, terms of trade movements, and financial liberalization. The main finding is that predictions from a simple life cycle model do well inasmuch as the remarkable growth in private savings rates is associated with a fall in the dependency ratio. This suggests that a reduction in the number of children relative to working age population has alleviated household budget constraints, thereby boosting savings rates.

Suggested Citation

  • Johansson, Sara, 1996. "Life cycles, oil cycles, or financial reforms? The growth in private savings rates in Indonesia," SSE/EFI Working Paper Series in Economics and Finance 150, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0150
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    References listed on IDEAS

    as
    1. Jonathan D. Ostry & Carmen M. Reinhart, 1992. "Private Saving and Terms of Trade Shocks: Evidence from Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 39(3), pages 495-517, September.
    2. Masao Ogaki & Jonathan D. Ostry & Carmen M. Reinhart, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 38-71, March.
    3. Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
    4. Mr. Hamid Faruqee & Mr. Aasim M. Husain, 1995. "Saving Trends in Southeast Asia: A Cross-Country Analysis," IMF Working Papers 1995/039, International Monetary Fund.
    5. Deaton, A., 1989. "Saving in Developing Contries: Theory and Review," Papers 144, Princeton, Woodrow Wilson School - Development Studies.
    6. Masao Ogaki & Jonathan D. Ostry & Carmen M. Reinhart, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 38-71, March.
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    More about this item

    Keywords

    private savings; dependency ratio;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

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