Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105532
Authors: 
Hussein, Khaled A.
Thirlwall, A.P.
Year of Publication: 
1999
Series/Report no.: 
Department of Economics Discussion Paper, University of Kent 9904
Abstract: 
This paper seeks to analyse the major determinants of differences in the domestic savings ratio between countries using panel data for 62 countries over the period 1967-1995. A basic distinction is made between the determinants of the capacity to save and the willingness to save. The capacity to save depends primarily on the level of per capita income (but non-linearly) and the growth of income (the life cycle hypothesis), and the empirics strongly support these hypotheses. The willingness to save is assumed to depend on financial variables such as the rate of interest, the level of financial deepening and inflation. We find no support for a positive interest rate effect, but strong support for the level of financial deepening measured by the ratio of quasi-liquid liabilities to GDP. Inflation exerts a mild positive effect on saving but soon turns negative. Total saving also depends on government saving, and a surprisingly strong negative relation is found between the ratio of tax revenue to GDP and the domestic savings ratio.
Subjects: 
Domestic savings
income
financial variables
tax
JEL: 
E21
Document Type: 
Working Paper

Files in This Item:
File
Size
81.46 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.