Transitional Dynamics of the Saving Rate and Economic Growth
Abstract
We estimate the relationship between GDP per capita growth and the growth rate of the national savings 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 savings rate in poor countries (rich countries), and a higher credit-to-GDP ratio decreases the national savings rate as well as the income elasticity of the national savings 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 savings rate.
Cite
@article{arxiv.2012.15435,
title = {Transitional Dynamics of the Saving Rate and Economic Growth},
author = {Markus Brueckner and Tomoo Kikuchi and George Vachadze},
journal= {arXiv preprint arXiv:2012.15435},
year = {2021}
}